No Consensus After EU Summit, Euro Still Under Adjustment Pressure

No Consensus After EU Summit, Euro Still Under Adjustment Pressure

USDX saw the largest weekly increase in a month last week, gaining 0.54% over the whole week. Analysis pointed out that the second wave of coronavirus global outbreak boosted market risk aversion and made USD much sought after by investors, but in my opinion, the V shape rebound in US has been the main cause. On the contrary, Eurozone economy remains sluggish, while neither the EU summit or meeting between EU and UK has any good news; this weakens the euro and indirectly supports the exchange rate against dollar.To get more news about WikiFX, you can visit wikifx news official website.   US economic data released last week has obviously outperformed Europe and Asian countries, both retail sales and the Philadelphia Fed's manufacturing index appeared strong. Forex traders have noticed that the Fed has little pressure to introduce negative rate and step up QE, while other central banks are still under such pressure. As expected, EU‘s 27 members still failed to reach a consensus over the €1.85 trillion financial aid program in the latest EU video conference, leaving the matter for further discussion scheduled in mid-July. Among the scheme, the €7,50 billion economic recovery fund is much likely to be opposed by the frugal member states from Northern Europe, such as Sweden, Netherlands, Austria and Denmark. Personally, I think the scheme is still unlikely to be approved during the mid-July meeting. ECB Chair Lagarde has called on EU leaders to take measures to support Eurozone economic revival, noting that European economy is in rapid decline. Meanwhile, Italy’s fiscal situation is at a precarious state with the constant delaying of the recovery fund. This casts an even more gloomy outlook over euro, while benefiting USDX.   Several key US economic statistics are being released this week, and if the data looks good, it can further prove that US economy is in a V-shape rally. Notable indicators include a series of PMI and new home sales to be released on Tuesday, the durable goods order on Thursday and the weekly spotlight of Q1 GDP. As many economic statistics of UK and the Eurozone are also being released, it‘s a good idea to compare these stats and analyse the economic trends of US and Europe to see what directions they’re moving to.

If EUR/USD successfully breaches downward the 1.1146 level, it is estimated that it will test the 1.1000 level. Meanwhile, supported by a weak euro, USDX is effectively challenging the major resistance levels of 98.27 and 98.645.   [About The Author]   Since 1987, Jasper Lo has been engaged in the financial industry (forex, futures and gold) for more than 32 years and holds forex R.O., securities and futures broker licenses. Mr Lo is an expert in trading forex, precious metals and commodity futures and an basic and technical analyst.   Over the years, Mr Lo won many individual and team sales champion awards, as well as outstanding employee awards. He was invited, as a guest mentor, to the University of Hong Kong, Guangdong Ocean University and Guangzhou Jinan University. And he was also appointed as the chief training consultant by Hantang Securities and Dongguan Securities in China.