Christopher Lewis
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The Euro initially pulled back during the trading session on Thursday but found plenty of buyers underneath the 1.14 level as it now looks like we are trying to break out and continue the move to the upside. The next obvious target will be the 1.15 handle, an area that I think will be rather difficult to break through. However, if and when we do, it is likely that the Euro has just changed the longer-term trend.

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This is not because the European Union is so much stronger than the United States from an economic standpoint, it is just that the coronavirus figures are the biggest things that markets are paying attention to right now. Europe has handled the virus much better than the United States, so it is being rewarded with a stronger currency. There are still a plethora of zombie banks in the European Union, so this will probably just be more of a grind higher than anything else.

EUR/USD Video 17.07.20

It is not necessarily that everybody wants to invest in Europe, it is just that the valuation of the US dollar is extraordinarily high right now, and that should continue to be an issue overall. Granted, we have seen the US dollar lose some value recently, but from a historical standpoint we still see more room for the US dollar to move lower, barring some type of major economic event. With the way this year is gone, it certainly cannot rule that out. Short-term targeting of the 1.1450 level is probably what is going to happen.

For a look at all of today’s economic events, check out our economic calendar.

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