Source: Economic Events May 29, 2020 – Admiral Markets’ Forex Calendar
Despite the stable performance in 10-year US yields over the last few days, the EUR/USD saw a break above 1.1000.
The main driver for the bullishness was the announcement of the EU commission, proposing a 750 Billion Euro fiscal stimulus package with 500 billion Euro in grants and 250 billion in loans.
While this might not come as such a big surprise after Germany and France’s Merkel and Macron proposed a 500 billion EU recovery fund on May 18, which would offer grants to European Union regions and sectors hit hardest by the coronavirus pandemic. This can be considered the first step towards a transfer union in addition to the massive monetary support from the ECB bullish for the Euro.
If today’s US economic projections, especially in terms of Personal Spending, see a further and even sharper than expected drop than -12.6% and after it dropped by 7.5% in March month-over-month, showing the largest decline in personal spending on record induced by the Corona-lockdown, yet bullish momentum in the EUR/USD could accelerate even further.
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That’s particularly true if the focus in 10-year US Treasury yields goes back to the important 0.60% mark where a break lower would narrow the yield differential between EU and US bonds further, favouring gains in the EUR/USD:
Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between March 29, 2019, to May 28, 2020). Accessed: May 28, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of the EUR/USD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, 2019, it fell by 2.2%, meaning that after five years, it was down by 7.3%.
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