EUR/USD seems stuck below 1.20 as busy week looms

Chris Lee

 

500 and 100 Valued Euro Bills in a pile in between piles of 100 USD bills

The euro had a successful performance in the foreign exchange trading markets last week.

It managed to surpass the key level of 1.20 in its pair against the dollar at one stage, though it has since rowed back from this high.

Part of the reason for the decline in value is that traders perceive the European Central Bank (ECB), which meets this week, to be highly concerned about the chances of the currency going back to this high level.

It is widely expected to act to this end when it meets later this week, though the key moves it will take remain unclear.

Several members of the ECB’s Governing Council, which makes the decisions about interest rates and other key monetary policy tools, have dropped hints to this end over the last few weeks.

Philip Lane, who acts as the ECB’s Chief Economist, was one such figure.

Last week, he was quoted as saying during a speech that the exchange rate of the euro had some significance.

There were also press reports in the UK later in the week that suggested that there were fears about the strong performance of the euro in relation to demand.

There is a suggestion that the rise in the euro could hurt the bloc due to the fact that demand for products is so low across the globe.

What the ECB will actually do if it decides to constrain this rise, however, is another matter.

It is not expected to change interest rates.

The consequence for the currency is also questionable, and analysts appeared to be more confident of where the currency was unlikely to end up rather than where it was likely to go.

There is a general belief that the price will not surpass 1.20 again thanks to the ECB’s position – meaning that last week’s high of 1.2011 is unlikely to be replicated this week.

In terms of the economic calendar, meanwhile, there is a perception among many analysts that this will most likely be forgotten about by traders for the week.

Traders are instead expected to focus in large part on the ECB’s meeting, and specifically how its head, Christine Lagarde, responds to the developments.

However, there are still some moments to watch out for on the data release list for the week.

A series of trade balance figures for the month of July from across the bloc will come out early on Tuesday morning.

One that is particularly expected to be watched will be the German release, which is due at 6:00am GMT.

This will be followed by figures from France at 6:45am GMT.

Bloc-wide gross domestic product figures for Q2 2020 will be out at 9:00am GMT.

These are expected to show no change from their previous position of -12.1% on a quarter-on-quarter basis.


Chris Lee

Latest news

Contagion Warning From Crypto Markets Could Be A Buy Signal
One of the reasons the 2020 market crash was so severe and sudden was that overextended investors sold out of positions to liquidate funds, which drove prices down further, and created a need for further selling. Read more
Market Guru Cathie Wood is Buying These Stocks Right Now
With the Nasdaq 100 index currently trading 28% lower than its January highs, the Q1 correction has transformed into a multi-month rout. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2011 Global CFD & FX Broker
Number One Broker
BEST FOREX BROKER Visit broker
5
#2 BlackBull Markets LogoYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
4.8
#3 66% of retail CFD accounts lose money Founded: 2014 Global Forex & CFD Broker
Number One Broker
Best Trading Conditions Visit broker
4.9
#4 Forex Broker eToro Logo67% of CFD traders lose Founded: 2007 Global CFD & FX Broker
Number One Broker
ALL-INCLUSIVE TRADING PLATFORM Visit broker
4.9
#5 Forex Broker Pepperstone LogoBetween 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
4.9

    Forex Fraud Certified Brokers

    Pepperstone Logo
    ATFX Logo
    Forex.com Logo
    skilling logo
    BDSwiss Logo
    Exness Small Logo
    AvaTrade logo
    City Index Logo
    LegacyFX Small Logo
    IQ Option Logo
    OctaFX Logo
    FXTM Logo
    HYCM Logo
    IC Markets Logo
    BlackBull Markets Logo
    Plus500 Small Logo
    XM Logo