Forex Trading Signals: EURUSD October-November 2020

■ Market: Foreign Exchange, EURUSD

■ Forecast: EUR against USD will probably remain strong until the American Elections (Nov, 3rd), then the US Dollar is expected to significantly recover against all majors

2020 is a case-study year. After the global lockdown that took place in March, nothing is the same. The key monetary policies of central banks are changed, inflation targets are gone, employment figures are collapsed, and the real interest rates are actually negative. Furthermore, the global supply chain has broken and the whole concept of economic globalization is seriously harmed. What a year this is for the Forex markets and the world. In this challenging environment, FED and ECB struggle to stimulate their economies and preserve employment and consumption. This is happening through the implementation of extremely-flexible monetary policies and the injection of a record liquidity into the system.

EURUSD Macroeconomic Outlook

These are some key facts and figures regarding the US and Eurozone:

Eurozone Economic Figures and Forecasts

• The ECB interest rate on its main refinancing operations is zero (0%), on its marginal lending facility remains at 0.25%, and on its deposit facility remains at -0.50%
• The economy in the Euro area is expected to shrink by 8.3% in 2020 and grow by 5.8% in 2021
• In July 2020, the euro area annual inflation rate was at 0.4%, from 1.4% in July 2019
• Eurozone unemployment was announced at 7.9 % in July 2020
• The EU has announced a massive €1.82 trillion joint recovery package to stimulate the economy

United States Economic Outlook

• The FED funds rate is at 0.25% and it is expected to stay between 0.0% and 0.25%, at least until the end of 2021, and maybe until 2023
• According to the recent FOMC meeting, the GDP is expected to decline by 3.7% in 2020
• There is an expectation for a GDP recovery of 4.0% in 2021, 3.0% in 2022, and 2.5% in 2023
• The annual US inflation rate was 1.3% for the 12 months ended in August 2020, according to the US Labor Department
• In August 2020, the unemployment rate in the US declined by 1.8% to 8.4% percent, and the number of unemployed fell by 2.8 million to 13.6 million
• There is a noticeable difference between the yields of the 30-year and the 10-year US treasuries that is healthy and confirms the prospect of long-term economic recovery

US Treasury Yields:

■ 30-Year US Treasury: 1.419%

■ 10-Year US Treasury: 0.671%

EURUSD Forecast

Currently, most analysts are bearish on EURUSD. However, until the American elections of early November, EURUSD will most likely stay bullish. Economic stimulus and a weak dollar facilitate the liquidity of the system and boost the American equity markets. Mr. Trump needs strong equity markets to win the elections and he will do anything to achieve that goal.

 

EURUSD Technical Analysis

In July, EURUSD broke-out of a huge symmetrical triangle that started to form many years ago. The exchange rate returned to the upper boundary (1) of the symmetrical triangle in order to confirm the brake-out. This level 1.158-1.160 is very significant for EURUSD.

• If EURUSD proves incapable of maintaining these levels, we should expect a retracement to 1.120-1.122
• If 1.158-1.160 holds, then we should expect EURUSD to test the highs of 1.198-1.200 in October

Chart: EURUSD (Monthly) & Bollinger Bands

 

 

LONG-TERM SUPPORT & RESISTANCE

These are some key support and resistance levels for EURUSD.

■ Short-Term Supply Level (Long-Term Resistance):

If EURUSD manages to hold 1.158-1.160, we should expect it to test the highs of 1.198-1.200.

(↑) 1.198-1.200

(↑) 1.260-1.268

■ Short-Term Demand Level (Long-Term Support):

If the upper bundle of the symmetrical triangle brakes to the downside, then EURUSD is expected to test 1.120-1.122.

(↓) 1.158-1.160

(↓) 1.120-1.122

 

TCI on EURUSD

The Trading Center Indicator (TCI) is a unique Technical Analysis Indicator developed by TradingCenter. ► More About TCI. According to TCI, the key date for EURUSD is the 29th of September. Here are recent TCI Indications regarding EURUSD (press the following slider to reveal).

 

EURUSD Statistics

Here are the Statistics for EURUSD based on 18 years of research by TradingCenter. Historically, October is a bearish month for EURUSD, however, November and especially December are considerably bullish months.

MONTH	TIMES		RETURN
	↑	↓
OCTOBER	7	11	-0.70
NOVEMBER	9	9	+0.12
DECEMBER	11	7	+1.40

► More Statistics Here

 

EURUSD Analysis -Final Words

As the American elections are getting closer, EURUSD is expected to remain strong in October 2020. More economic stimulus and a weak dollar facilitate the liquidity of the system and boost the American equity markets. President Trump needs strong equity markets to go to elections. Overall the momentum is positive for EURUSD. However, October is historically a bearish month for EURUSD, and in the case of another liquidity crisis, the demand for US Dollars will boom exactly as it happened in March.

After the American elections, the market will have to make a decision. Most probably, after the American elections, the US Dollar will grow significantly stronger against all majors.

 

■ Free Forex Trading Signals: EURUSD October-November 2020

Protonotarios, Financial Analyst, George at Linkedin

TradingCenter (September, 28th 2018)