EUR/USD. When to expect 1.15?

By 09/08/2021News
morning-news

Gold  1740,885
(-0,10%)

EURUSD   1,1762
(+0,02%)

DJIA  35037,50
(-0,16%)

OIL.WTI  66,985
(-1,62%)

DAX  15761
(+0,01%)

Investors and traders waited last Friday for US labour market data. Needed an answer to fears of a global and US economic slowdown. The trigger was a new rise in coronavirus infections.


EUR/USD

EURUSD

The data published at the end of the week was very strong. The number of new jobs in the US economy in July was the highest in over a year. At the same time the unemployment rate also fell in July from 5.9% to 5.4%. Both figures substantially exceeded analysts’ forecasts. In addition, the number of new jobs created last month was revised upwards.
This reinforced investors’ expectations of a normalisation of the US labour market. The yield on 10-year Treasuries rose to 1.3%, reaching the highest level since mid-July.
More important to forex traders, however, was the reaction of the Dollar Index. It rose sharply, almost to 93 points. And the EUR/USD dropped to 1.1760.
If we abstract from the rather strange policy of the Fed, which refuses to tighten monetary policy, we see the following. U.S. government bond yields should sooner or later reach 2% and then 3% per annum. In contrast, European bonds are unlikely to move upwards from zero yields.
These expectations, as well as a more rapid vaccination of the U.S. population, should push the EUR/USD pair lower. The first target of 1.15 is fairly quick. The second target is the 1.10 level.


Why do fewer traders believe in this scenario?

The stock, money and currency markets are in their second year of absurdity. All the obvious fundamental factors that worked before are now irrelevant. Traders have already bet several times during this time on a sharp rise in the US dollar. And each time they were disappointed in their expectations.
It is quite possible, that the situation will not change this time. And in a month we will see a new report on the labor market in the USA. It will be much worse than expected. Another reversal of the EUR/USD pair, already towards the level of 1.20.

03.30 China consumer price index for July


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.