Source: Economic Events July 10, 2020 – Admiral Markets’ Forex Calendar
The Euro continued to stabilise against the region around 1.1150/1200, while still aiming at the 1.1300 mark, as such a sustainable break higher levels the path up to 1.1400/50 and possibly even higher.
Technically, we consider the region around 1.1350 to be the “make-or-break” level, where a sustainable break higher could deliver the fuel for a stint up to the region around the current yearly highs.
But the question is: “What could ignite such a bullish stint and break higher?”, especially given the quite thin economic calendar for the weekly close and the near-future?
Our main focus remains on the developments in 10-year US yields, as they near the important support region around 0.60%, and a break lower would not only drive Gold higher, but also the USD lower (thus pushing EUR/USD higher).
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As already pointed out in our last on Gold last Wednesday, the shrinking Fed balance sheet resulting out of a continuing decline in demand for the US central bank’s USD swap lines from foreign central banks like the ECB, BoJ or BoE while rather sooner than later reverse again and thus result in pressure on US yields and on the US dollar again.
Therefore, we should keep a close eye on developments in Equity markets, where rising volatility could trigger such an expansive monetary policy approach from the Fed among market participants.
While short-term a break above 1.1350 brings the focus on the region around 1.1400/50, the broader picture and break above leaves EUR/USD with bullish potential up to the region around 1.1700/1.1800, while only a drop below 1.1150 could trigger a deeper correction with a target around 1.1000:
Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between May 10, 2019, to July 9, 2020). Accessed: July 9, 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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