- EUR / USD sets a new 32-month high above 1.2120.
- The widespread sell-off of the dollar and the slowdown of the coronavirus across Europe are pushing the pair higher.
- Morgan Stanley expects a continued decline in the US dollar.
There seems to be no way to stop the EUR / USD rally. The currency pair is now trading near 1.2125, the highest level since April 2018, having recorded a convincing break above 1.20 earlier this week.
EUR / USD has hit a 32-month high for the second day in a row and is now up 8% so far this year.
According Kathy Lien, from BK Asset Management, the EUR / USD is being driven higher by several factors, the bearish sentiment of the US dollar, a slowdown in coronavirus cases in the Eurozone, stronger data from the Eurozone and the rebound of the market of values.
The dollar is offered across the board, apparently due to the rise of the twin US deficits (current account and fiscal). Analysts at Morgan Stanley expect the dollar to fall 10% over the next 12 months and that a weak dollar bodes well for the global economy.
It is expected that the European Central Bank (ECB) announce more stimulus at its meeting on December 10. However, the plan was telegraphed by the ECB, allowing investors to discount the measure. “So while the outlook for an ECB easing is negative for the euro, the lack of surprise may be positive for the currency,” said Kathy Lien.
Simply put, the EUR / USD rally is likely to continue, although there may be healthy pullbacks in between. On the data front, today the focus will be on the final PMI releases for services and retail sales in the euro zone and weekly jobless claims in the United States.
Technical Levels
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