- June’s Consumer Price Index rallied by 0.6% on a month-on-month basis.
- The labor market indicates improvements.
- Recession concerns are holding back the U.S dollar.
The EUR/USD exchange rate started this week on a strong bullish run, but sideways performance on Wednesday morning highlights potential market correction. The bull run is an indicator that the Euro gained significant ground over the U.S despite the release of favorable marked data for June. The data indicated that the labor market is recovering after huge job losses in the previous months due to the coronavirus pandemic and the resulting economic fallout. The Consumer Price index also highlighted some improvements in June.
Time : 07-15-2020
Pivot : 1.1382
Technical View : Long Above 1.1402
Target : 1.1422, 1.1455, 1.1486
Technical View : Short Below 1.1362
Target : 1.1342, 1.1326, 1.1278
The EUR/USD’s bullish performance on Monday and Tuesday indicates that the Euro gained ground over the U.S dollar. However, there is a chance that the Greenback might take back some of its losses thanks to the recently released unemployment data, which revealed that payroll employment grew by 7.5 million in May and June. The unemployment rate shrunk by 3.6 percentage points during the same period.
There was also a favorable Consumer Price Index in June, with the MoM CPI increasing by 0.6% during the month. This was higher than the 0.5% that analysts had anticipated. The economic reopening supported these numbers after the previous lockdown measures that had been put in place due to the coronavirus. The measures resulted in businesses reopening, thus spurring economic recovery and economic growth.
The U.S dollar’s outlook
The EUR/USD’s sideways performance on Wednesday morning might be an indicator that the price may pull back. As far as the long-term outlook is concerned, there is still no cure for the corona, which means that the economy might continue to take a hit for longer. Federal Reserve officials are preparing for a potentially extended recession, in which case will take a toll on the U.S dollar.
At this point, the rate of economic recovery largely depends on government intervention and, more importantly, efficiently preventing the spread of COVID-19. The good news is that Moderna’s developmental COVID-19 vaccine has so far demonstrated positive findings in clinical studies.