Forex Trading Signals: EURUSD October-November 2020

■ Market: Foreign Exchange, EURUSD

■ Forecast: The euro is likely to stay strong against the US dollar until the American elections on November 3rd, after which the US dollar is expected to recover significantly against all major currencies.

2020 is a case-study year. After the global lockdown in March, everything changed. Central banks shifted their key monetary policies, inflation targets disappeared, employment collapsed, and real interest rates turned negative. On top of that, the global supply chain broke down, and the entire idea of economic globalization was seriously damaged. What a year for the Forex markets and the world. In this difficult environment, the FED and ECB are struggling to stimulate their economies and maintain employment and consumption. They are doing this by applying extremely flexible monetary policies and injecting record levels of liquidity into the system.

EURUSD Macroeconomic Outlook

These are some key facts and figures regarding the US and the 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, which 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 EUR/USD. However, until the American elections in early November, EUR/USD is likely to remain bullish. Economic stimulus and a weak dollar support system liquidity and boost the US equity markets. Mr. Trump needs strong equity markets to win the election and is likely to do whatever it takes to achieve that.

 

EURUSD Technical Analysis

In July, EUR/USD broke out of a large symmetrical triangle that had been forming for many years. The exchange rate then returned to the upper boundary (1) of the triangle to confirm the breakout. The 1.158–1.160 level is very significant for EUR/USD.

• 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 breaks 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 EUR/USD is September 29th. Here are the latest TCI indications for EUR/USD (use the slider below to view).

 

EURUSD Statistics

Here are the statistics for EUR/USD based on 18 years of research by TradingCenter. Historically, October is a bearish month for EUR/USD, while November—and especially December—tend to be strongly bullish.

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 approach, EUR/USD is expected to remain strong in October 2020. Additional economic stimulus and a weak dollar support system liquidity and boost US equity markets. President Trump needs strong markets heading into the elections. Overall, the momentum favors EUR/USD. However, October has historically been a bearish month for EUR/USD, and another liquidity crisis could drive strong demand for US dollars, as happened in March.

After the American elections, the market will need to make a clear decision. Most likely, the US dollar will strengthen significantly against all major currencies.

 

■ Free Forex Trading Signals: EURUSD October-November 2020

Protonotarios, Financial Analyst, George at Linkedin

TradingCenter (September 28th, 2018)