Latest EUR USD Analysis and Forecasts

Global Markets Outlook 2021

Initial Parameters:

  • Chart analysis is technical and taken from medium-term historical pattern
  • Technical projections based on a twelve-month time horizon
  • Targets set are based on the most recent, significant technical adjustment
  • Analysis is based on Elliot Wave and Fibonacci techniques
  • Technical analysis only guides; exogenous factors can shock any market
  • Markets, being capricious, forecasts are subject to revision
  • Fundamental analysis can be commissioned on request
  • Equity sector analysis is thematic

United States of America, T Bills:

  • Across the Treasury Bill curve too much cash has chased too little paper
  • There is a real prospect of negative yields across the T-Bill curve
  • The secured overnight financing rate (SOFR) will follow this path

US Treasury Notes and Bond; 2 ~ 30 year

  • Since July 2020, T10 note and T30 bond yields have steadily risen
  • 2/10 steepened by 53.4 bps since the start of 2020 to Dec 31
  • Treasury Department has to quickly signal the path of borrowing

US Treasury 2/10 Spread (bps)

  • As Fed has delivered accommodation, so 2/10 spread has recovered
  • Any bill shortage will impact the curve out to the T2, T3 and T5
  • There will be further steepening

US Treasury Butterfly T2 -(2 x T5) + T10

  • Butterfly (Barbell) spread has recovered since April
  • The recovery in the economy is supported by this move
  • There will be further improvement under Biden and accommodative Fed

Eurozone ~ 2 year (bps) over Germany:

  • Complacency widespread since “…whatever it takes” and “OMT”… … the front end of the market has been skewed by ECB policy
  • Italy is a reason to worry as Conte lacks the backing for basic reform

Eurozone ~ 2 year (bps) over Germany:

Why does France yield less than Germany? G2 > F2 3bps Dec 31, 2020!

Eurozone ~ 10 year (bps) over Germany:

  • Same for 10 year paper…
  • Ever since “…whatever it takes” and “OMT”…
  • … the long end of the market has been equally skewed by ECB policy
  • Look at Italy, trading at a significant margin to Spanish spreads

Eurozone ~ 10 year (bps) over Germany:

France hardly moved, average spread > Germany in 2020 was 33.3bps

Eurozone ~ Greece; problem overlooked:

  • Relief from EU/EZ budget demands aids attempts to recover lost growth
  • Large fiscal gap and Debt:GDP at 176.6%, however, GGB10 YTM 0.630%
  • Consumer Confidence decreased to -48.30 points in November

Eurozone ~ Greek inflation collapses

  • Consumer prices in Greece decreased 2.1% YoY in November of 2020
  • It is the eighth straight month of deflation
  • Structural issues not resolved, with youth unemployment at 33%

UK Gilts (%):

  • UK front end has broken into a declining channel during 2020
  • BoE kept rates at 0.1%; may go negative, bond buying still £875 Billion
  • Trade deal with EU will stabilise UK GDP growth; COVID-19 still impedes

UK Gilt Yields (%):

  • Negative yields out to the 5-Year as 48% of all issuance yields < 0%
  • That means £1.25 Trillion ($1.71 Trillion) is a cost to investors to hold
  • 2-Year ended at an all-time high, booking best price gain since 2011

US, European and Chinese Equities

Technical analysis in each chart is over the 12-Month trading range
Given extreme volatility we have shown 50 and 200 day moving averages for 2020

Developed cf. Emerging Market Equities:

  • Post March/April collapse developed and emerging equities rebound
  • Emerging equities have closed the gap and more sought than EM debt
  • Expectation of good cash flow from domestic demand recovery

US Equities:

  • Main US equity indices enjoyed a steady expansion since March
  • There will still highly volatile sessions as COVID-19 rampages
  • Markets still optimistic about “Biden Boost” via infrastructure; stay bullish

CBOE Volatility VIX:

S&P 500 Volatility Index:

Dow Industrials 12 – Month & Fibonacci

S&P 500 12 – Month & Fibonacci:

NASDAQ 12-Month & Fibonacci:

European Equities, leading markets

  • All recovered after suffering a setback on COVID-19 worries
  • DAX is the most secure investment; indeed it is pulling away from the rest
  • IBEX 35 has underachieved with respect to its peer group

DAX 12-Month & Fibonacci:

CAC 40 12-Month & Fibonacci:

FTSE MIB 12 – Month & Fibonacci:

IBEX 35 Fibonacci:

FTSE 100, the key “Non-Euro” European:

  • FTSE 100 has found breaking back above the 7000 level difficult
  • “Brexit” is over…at least in the main, FTSE to rise on vaccine hopes
  • FTSE 100 will press ahead in 2021 as private sector recovers

FTSE 100 Fibonacci:

CSI 300 12 – Month:

  • CSI 300 extends gains to make new 5 1⁄2 -year highs
  • Driven by consumer stocks as consumer confidence seeking new record
  • Investors hope for more measures to spur the country’s consumption

CSI 300 Fibonacci:

Spotlight Indices: 14 Equity Sectors:

  • Cyclical…
  • Auto…Basic Resources…Capital Goods…Consumer Cyclical… Financial…Travel & Tourism
  • Defensive…
  • Consumer Staples…Health Care…Tobacco…Utilities
  • Sensitive…
  • Communications…Defence…Energy…Technology

We asses on a modified traffic light scale:

Equity Sector 2020 Performance:

Equity Sector 2020 Performance:


  • Global light vehicle production fell to 69.3 million units
  • Sales in 202 were seen at 69.6 million, -18.0%
  • The pandemic remains a clear and present danger to the autos sector
  • High levels of accommodation have boosted shares
  • New car sales will rise by 15% in 2021
  • Commercial-vehicle sales will increase by 16% in 2021 mirroring the collapse in 2020
  • Automakers forced to review global operations
  • This will result in plant closures and job losses
  • Therefore, the industry will consolidate
  • Electric vehicle sales are set to rise from 2.5 million in 2020 to 3.4 million this year, mostly in Europe

Basic Resources:

  • Mining firms had over produced before COVID-19 hit
  • Major players to book productivity gains
  • That can be boosted by commodity price rises in 2021
  • Much depends on Bidens’s infrastructure plans
  • China will be a big spender on domestic infrastructure
  • It will, however, pare back the Belt & Road activities
  • The ongoing labour disputes in Latin America may well boost copper
  • We will see a reduction in tariffs

Capital Goods:

  • Q3 return better than expected after a weak H1 2020
  • Expect good activity in Q3 and into 20201
  • In 2021 aggregate sector revenues to increase by 5% after a more than 8% drop in 2020
  • Driven by economic growth and increased industrial investment in most end markets
  • Customer activity is linked to the economic cycle
  • Best share performance to be seen in APAC region
  • However, do not miss a N. America and European bounce

Consumer Cyclical:

PowerPoint Presentation

  • Retail sales declined by 5% in 2020
  • Investors are looking for an earning recovery
  • They will gain 4% in 2021; it will not be even
  • ❖  Africa 1% ~ 3%
  • ❖  Asia 5% ~ 7%
  • ❖  Europe 1% ~ 3%
  • ❖  North America 4%~6%
  • ❖  South America 2% ~ 4%
  • COVID-19 accelerated the questions over a bricks and mortar retail approach
  • Consumers will increase migration to online
  • This will require sellers invest in sophisticated order and delivery systems
  • High end luxury will thrive
  • There will be more bankruptcies among once famous names


  • Financial services successfully migrated online
  • Banks were crucial in stabilising the economy
  • Transmitted government stimulus and relief programs
  • Consequences of COVID-19 not on the same scale as those during the Global Financial Crisis of 2008–10
  • There will, however, be a new competitive landscape
  • Branches will close amid increased digitalisation
  • COVID-19 has shown only competent digital banks will survive…
  • …Focus on social distancing, personal safety etc.
  • Progress fettered as deep provision for NPL’s is made
  • In the US, Average ROE fell to 5.6% in 2020, this year will be 8.0% but in 2022 it will bounce to 11.6%

Travel & Tourism:

  • Last year really dealt the sector a severe blow … -54.2% by April
  • United Nations World Tourism Organisation (UNWTO) show that international tourist arrivals declined 70% in the first eight months of 2020 cf. 2019
  • Amounts to 800 million fewer international arrivals year-to-date for 2020, and a loss of S$730 billion in tourism revenues
  • There have been signs of tourism demand shifting to domestic travel in China
  • Once vaccines are widely adopted Europe and America’s can follow
  • 80% of industry experts expect a recovery to begin in travel during 2021…
  • …However, the industry will not be at pre COVID-19 levels until 2023

Consumer Staples:

  • Consumer Staples 6th best sector in 2020
  • e-Retailing continues to surge
  • Over 50% of e-commerce in 2018 will be in China
  • The recovery reversed in October because money has moved to cyclicals
  • In retailing the timing and trajectory of the recovery back to pre-pandemic norms is up for debate
  • Until there is a full return to the workplace the market dynamic for “Staples” looks favourable for online sales
  • There will be a greater presence for the “disruptors”
  • Store chains with heavy value of “Bricks and Mortar” assets are set to struggle
  • Increase in M&A as bottom line is squeezed
  • With over 260 sub groups it is often hard to be in the right area of a key defensive sector

Health Care:

  • National health services under budget strain, globally
  • However, state budgets will rise by 6% as public will demand greater resources post COVID-19
  • State systems cannot have a blank cheque, they have to be accountable
  • Can health services smoothly deliver the vaccine?
  • There will be a struggle to recover lost ground in non COVID-19 care
  • Can Biden afford to reverse light touch to US regulation
  • Biotech firms to work even closer with “Big Pharma”
  • Expanded use of smart computer modelling for trials
  • This is an industry where R&D will garner high levels of investment attention


  • Sales declined in 2020, however, operating profit is set to rebound 5% ~ 10% (Moody’s)
  • Long-term impact of COVID-19 on consumption too early to gauge
  • Traditional tobacco sales will decline5% as consumers switch to lower priced products
  • This hasten the move to alternative products although this will see tighter regulation
  • The curiosity is the regulation will prove a barrier to entry and so protect profits of existing key players
  • Leverage ratios will continue to improve despite high dividend payments
  • Free cash flow and available cash balances will be used to repay pending debt maturities


PowerPoint Presentation

  • Global utilities face 2021 with issues of how supplies are provided front and centre for the industry
  • Competition authorities will investigate the excess of “Monopoly Power”
  • Therefore, can the leading incumbents retain their level of market share?
  • Challenge is delivering for customers and shareholders at a time of transformation
  • Internet of Things (IoT) will drive the “Smart Home”
  • This will drive a world of Demand Side Response (DSR)
  • Major hurdles to overcome are: ❖ Decarbonisation with 2030 and 2050 targets Security of supply – especially for water
    Affordability of supply

• Are utilities sufficiently resilient to the pressures of changing demographics and climate?

Communications & Media

  • Delays to events such as the Tokyo Olympics, European Football Championships and the latest James Bond movie hit revenues
  • Advertising revenue fell 7% in 2020; it will rebound 6% in 2021 to $573 Billion (Magna Research)
  • Advertising in APAC will grow the fastest
  • US will be slowest after the 2020 election $ splurge
  • The shift in advertising to online will continue
  • Thus, print advertising will retreat further
  • TV advertising will rise 2% (Zenith Media) and radio by 1%
  • Cinema badly needs a return of customers, however, they may only make money on blockbusters
  • On demand and streaming will rise dramatically as many movies will go straight to Amazon, Netflix etc


  • Delays to full capacity commercial travel means defence contractors will outperform civilian plane manufacturers
  • Countries will spend on strengthening their military forces as geopolitical tensions intensify
  • Global defence spending is expected to grow 2.8% in 2021, so exceeding $2 Trillion mark
  • Under Biden defence spending in the US is likely to remain flat in 2021
  • As funding continues to increase and costs decline, the space industry will experience increased opportunities
  • Look for growth in secure satellite broadband
  • Space will increasingly become a military domain and so space launch services are also expected to record strong growth of 15% YoY in 2021 (Deloitte)


  • Demand for energy collapsed during the pandemic
  • On April 20, 2020 WTI closed at -$37.63/barrel
  • Since then crude oil volatility as barely flickered
  • Little improvement seen in the market in H1 2021
  • The long-term, H2 2021 and 2022 one can be optimistic about a rebound of oil demand
  • OPEC+ will be the dominant factor for 2021 oil supply
  • Under Biden we may see oil flows from Iran and Venezuela
  • Prices will slowly rise in H2 2021, however, caution is advised, given uncertainties regarding OPEC spare capacity and COVID-19 vaccine deployment
  • Renewables, nuclear, and renewable fuel growth to accelerate and further challenge fossil fuels


PowerPoint Presentation

  • The outlook for technology is stable
  • It is supported by declining macro uncertainties and reduced supply chain disruption
  • Industry volatility will reduce
  • Secular growth supported by technology adoption across various industries will reduce the industry’s reliance on IT demand
  • We look for single-digit overall technology hardware spending growth in 2021 driven by
  • ❖  Data centre capacity expansion
  • ❖  5G buildout
  • ❖  Increasing content in auto and industrial functions

• M&A to continue fuelled by

  • ❖  Investor confidence
  • ❖  Innovation stream
  • ❖  Cheap capital
  • ❖  Push to create earnings growth by acquisitions

Foreign Exchange Rates

Technical analysis in each chart is over the 12-Month trading range

EURUSD: In 2021; $ will make gains

GBPUSD: £ to fade as BoE go negative

EURGBP: € will gain as Brexit bites

USDJPY: Ready to breakout for $ gains

USDCHF: Bear trend will reverse at 0.8372

USDCAD: 1.2971 is key to US gains

USDJPY: Break 104.66; heralds $ upside

BTCUSD: Can you handle the volatility?

Commodities Energy, Metals Food Products

Technical analysis in each chart is over the 12-Month trading range

Thomson Reuters/Core Commodity CRB

Crude Oil WTI USD/Barrel: Ignore the – ve

Heating Oil USD/Gallon:

Natural Gas USD/Mm BTU:

Gold USD/Troy Oz:

Silver USD/Troy Oz:

Copper USD/lb:

Iron Ore Fines 62% Fe USD/Tonne:

Grains…Corn USD/Bushel:

Grains…Wheat USD/Bushel:

Grains…Soybeans USD/Bushel:

Soft…Cocoa USD/Tonne:

Soft…Coffee USD/lb:

Soft…Cotton USD/lb:

Soft…Orange Juice Concentrate USD/lb:

Soft…Sugar USD/lb:

Meat…Live Cattle USD/lb:

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