- EUR/USD’s attempt to reach a 4-month high at 1.1470 met with resistance.
- EU stimulus negotiations fail to yield a deal, thus holding back the Euro’s gains.
- U.S consumer sentiments drop.
The EUR/USD exchange rate had an interesting run on Monday morning, during which it attempted to rally to its 4-month high at 1.1470. However, the exchange rate faced heavy resistance, which pushed the price down. Analysts believe that the resistance is due to investors holding back on the Euro after EU negotiations regarding a stimulus deal ended in a stalemate.
Time : 20/07/2020
Pivot : 1.1426
Technical View : LONG ABOVE 1.1446
Target : 1.1455, 1.1465, 1.1479
The EUR/USD exchange rate has a bullish run on Monday morning’s trading session, as demonstrated by the above chart. EU leaders found themselves in a deadlock on Sunday after negotiations, which spanned three days failed to yield any desirable results. The leaders were attempting to find a solution that would help revive EU economies, and the legislators could not come to an agreement on whether to use economic stimulus.
The EU leaders’ failure to reach a decision created a situation of uncertainty for traders. This, in turn, results in a situation where traders cannot act so much on the Euro due to the uncertainty, thus its failure to rally against the U.S dollar.
Meanwhile, the dollar seemed to have been losing ground against the Euro on Monday morning, largely due to the weak consumer sentiment data that was released on Friday by the University of Michigan. The report revealed consumer sentiment data, particularly the preliminary sentiment index in the U.S, dropped to 4.9 points in June compared to the 5.8 points in the May report.
The report likely influenced investor sentiments on Monday morning, thus giving the Euro more stamina to rally against the Euro. Analysts believe that the consumer sentiment improved in May due to the economic reopening, but the lower sentiment in June was influenced by concerns over the increasing COVID-19 cases. They also believe that the declining sentiment was influenced by the rising tensions between China and the U.S.