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24.07.202014:08 Forex Analysis & Reviews: EUR/USD: Euro remains hopeful for growth

The USD index declined to its lowest level in almost two years around 94.5 points amid growing concerns about the pace of the US economic recovery.

Analysts said that the delay in the adoption of the next stimulus package in the United States could worsen consumer sentiment at a time when the weaker statistics on the United States begin to come out.

Yesterday, the labor Department reported that the number of Americans who first applied for unemployment benefits in the week ending July 18 increased by 109 thousand, to 1.416 million people. Experts expected the figure to be 1.3 million.

In addition, the number of COVID-19 cases in the United States approached 4 million on Thursday, with an average of more than 2,600 new cases reported every hour, the highest in the world.

The EUR/USD pair continues to hold in the area 1.16.

The reports on business activity in the eurozone, published on Friday, became another addition for the single European currency.

On the other hand, preliminary PMIs beat forecasts, showing a stronger rebound in services against manufacturing.

This gives investors hope that the worst phase of the epidemic in the EU has already passed, despite the fact that the coronavirus rears its head in parts of Belgium, Spain and France.

The single European currency is also supported by the results of the EU summit, at which a powerful stimulus package was agreed, which can accelerate the economic recovery in the region.

The main threat to the euro is now represented by news from the United States. Diplomatic tensions between Washington and Beijing are escalating, which could boost demand for a safe dollar.

Meanwhile, US Secretary of State, Mike Pompeo has sharply criticized China. In particular, he called the state regime in China, authoritarian. At the same time, he noted that the previously reached trade agreement between Washington and Beijing remains in force, which somewhat reassured investors.

It is assumed that in the absence of unambiguously negative news for the euro, the EUR/USD pair will continue to grow. On Thursday, the level of 1.16 was broken, and the next resistance level is in the area of 1.17 (where several key Fibonacci levels are located). Now, breaking through this level can open the way to 1.20 for the main currency pair.

Viktor Isakov,
Analytical expert of InstaSpot
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