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November 23, 2020
The Euro currency strengthened even longer when faced against the US Dollar currency in recent times. In fact, developments in the condition of the European region have been very gloomy in the last few weeks. However, even so, the EURUSD currency pair was able to remain in an upward bias for a longer period on Monday.
The main challenge for the euro to strengthen at this time is the survey data on the purchasing managers index, confidence, and also the German IFO. All of this data will be closely watched as a measure of how much damage is to the European economy.
Regarding the PMI data for the German Markit manufacturing sector, it is predicted that in November it will experience a decline towards 56.5. The data if it does occur will be much gloomy than the previous month's report which was at 58.2.
However, market players and investors actually see the economy of the European region as very good. Even the recovery in the European region is predicted to be superior to that of the United States. But if some of the data above are weak, it will break the Euro is strengthening at the moment.
Things can turn around if some of the key economic data above are reported to be better than initial expectations. Better data will help the EURUSD pair to bullish higher. Because after all market players and investors have to cut expectations of a dovish attitude from the ECB that was widely heard.
Currently, the EURUSD pair is recording a 0.10% increase towards the exchange rate of 1.1873. One of the other catalysts that have helped the Euro resilient is the optimistic mood in global markets. Many have high hopes for the Coronavirus vaccine. So that makes global risk assets also rose quite impressive.
The bullish Euro currency managed to turn things around when faced against the US Dollar currency. The gain succeeded in sending EURUSD to fly again to break the decline around 1.1850 towards the exchange rate of 1.1868.
A renewed risk direction ahead of the European markets opening on Wednesday helped the Euro to dominate the movement. Although this risk-on will still be suppressed by concerns over the possibility of a lockdown in major countries in the world.
Meanwhile, the movement during the early Asian session this morning, most of the risk assets suffered major losses. Asian stocks flushed following what was happening in the US stock market on Wall Street. The risk-off is caused by many market players and investors who are afraid of a lockdown in the United States. Because the policy, however, will cause the US economy to hurt even more in the midst of recovery efforts.
Then after the domination of risk-off, just before the European market opened, several Asian stocks rose, such as the Hang Seng HK and the Shanghai Composite. That is the main background for the bullish Euro and reversing the previous decline. The US dollar currency was depreciated when there were optimistic expectations of the global economy in 2021 and the dovish view of the Fed.
Market players and investors believe that the Fed has an uphill task to help the US economy recover. Given that the US Congress is very difficult to approve a fiscal stimulus. Moreover, previously the Fed also expressed its willingness to take these steps.
Another driver also came from the European region when there were hopes of a fiscal deal from the European Union. For the Euro challenge, bullish will come from European regional economic data regarding consumer price inflation. Then the renewed risk direction will also pay attention to the market.
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