EUR USD

Latest EUR USD Analysis and Forecasts

Corrective moves for stocks and the US Dollar

Macroeconomic/ geopolitical developments

• The COVID-19 coronavirus continues to spread globally, with the current epicentre still in Europe, but quickly shifting to the US.
  

• The British Prime Minister, Boris Johnson and Heath Secretary Matt Hancock have both tested positive for coronavirus (though symptoms are understood to be mild).
• The surge in cases in New York and the tri-state area of New York, New Jersey and Connecticut has even seen President Trump consider a quarantine of this area, to which New York State Governor stated, ‘I don’t think it’s legal’ and that it would bea ‘federal declaration of war’.
• Practically all European nations are in some form of lockdown, with restrictions on public movement and work from home rules enforced.
• Panic buying has subsided to an extent with the lockdowns, but some civil unrest is starting to surface, notably in Italy.
• Global Central Banks have slashed interest rate to or very close to 0%, with many Central Banks restarting Quantitative Easing (QE) programs.
• In addition, short-term liquidity funding for banks has been established to keep financial markets from a liquidity crisis, that was feared the prior week.
• Governments globally have introduced various fiscal stimulus and protection measures.
• The latest being the $2.2 trillion economic stimulus package passed by the US on Friday.
• The aim remains to protect businesses and workers from the inevitable economic slowdown that the lockdown restrictions will create.
• The economic slowdown has already been highlighted in the data, with a record of over three million weekly Jobless Claims number in the US on Thursday, this is Americans filing for unemployment.

Global financial market developments

• Global stock markets remain extremely volatile, with daily swings of 5-10%, but with a more positive tone seen over the past week, as the major averages have tried to form bases and recover.
• However, weak closes for global share indices on Friday have maybe signalled that this recovery effort has concluded for now.
• In the Forex space, the US Dollar has recoiled back lower against major currencies, having surged the prior week during a liquidity crisis.
• The “risk currencies”, the Australian and New Zealand, have been significant gainers in the past week.
• Moreover, the Euro and GB Pound have also shown strong recoveries versus the US Dollar, reversing much of the losses from the prior week.

• On the commodity front, Gold has surged back close to the March peak around $1700, partially due to technical supply issues in the underlying physical gold market, alongside a reaction to the weakening of the US Dollar.
• The Oil price has probed back lower, with West Texas Intermediate (WTI) oil still poised close to $20.
• Also, in the commodity space, base metals have tried to rebound, but the Copper recovery has stalled, with risks maybe turning back lower to start the week.

Key this week

• The US and European deaths from coronavirus and cases will remain in focus.
• The lockdown policies put in place by governments will also need to be monitored.
• Government support for financial markets, businesses and individuals will also stay under scrutiny.
• The overall functioning of the financial markets will be important too, of particular concern remain pressures in the stock and liquidity markets.
• The weak oil price also remains important to monitor going forward.
• Data is becoming more relevant again, with Thursday’s US Jobless Claims number a key focus, alongside global Purchasing Managers Index (PMI) data on Wednesday and Friday and the always important US Employment report, also Friday

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