10.11.202011:48 Forex Analysis & Reviews: Possible revenge of the euro bulls

The European currency rose and successfully bypassed the US currency in the EUR/USD pair, after the US presidential election. Now, this pair is trying to consolidate in the upward trend, but experts believe that the efforts of the euro may be intruded by ECB's actions.

In view of euro's further strengthening, the position of the representatives of the European regulator seems unclear. In early autumn, they approved the euro's decline below the level of 1.2000. However, its downward movement slowed down when investors did not see drastic changes from the ECB, although the monetary authorities have made it clear that they plan to increase incentives by the end of autumn. As a result, the European currency was almost at the bottom, testing the lowest level recorded since July 2020.

Analysts and traders are confident that interest in the single currency will remain high this week. This will help the EUR/USD pair test the psychological level of 1.2000. If this level is overcome, the pair will manage to get to the peak values. The euro is supported by the worsening COVID-19 situation in the US, which reduces the profitability of US Treasuries. In such a situation, experts emphasize that the chances of a dollar recovery are close to zero.

After the US presidential elections and the victory of Joe Biden, the "bulls" in the Euro became more active. They are aiming at the level of $1.2100 and above, but moving to these peaks will be difficult. At the same time, analysts warn that the bulls should monitor the risk of the euro's possible decline. It should be noted that the EUR/USD pair repeatedly approached the level of 1.1900 yesterday. If this mark is broken, experts are sure that the round level of 1.2000 will be reached. Today, this currency pair is trading near the range of 1.1836-1.1837, leaving no attempts to reach the level of 1.1900 or above.

Moreover, the buyers of the European currency are supported by the positive macroeconomic data from Europe, published last Friday. In September this year, industrial production in Germany rose by 1.6% m/m, exceeding the previous indicator of 0.5% m/m. Annually, industrial production fell by 7.3% y/y, which turned out to be better than the previous one, which plummeted to 8.7% y/y. Now, the current situation encourages optimistic forecasts. Analysts assumed earlier a significant deterioration in the annual dynamics of industrial production (up to -16.6% yoy).

According to the observations of specialists, the euro's active rise is due to the dollar's weakening. The US currency continues to decline amid Democratic victory and a possible increase in economic stimulus from Joe Biden. Analysts said that these measures are necessary to stabilize the economic situation in a country weakened by epidemiological risks amid COVID-19.

Experts are sure that the current situation will allow the euro to further rise. At the moment, the indicated currency is near repeated highs and is ready to continue its growth. However, the continuation of the upward trend in the single currency is filled with unnecessary intervention by the ECB. It is not excluded that the monetary authorities will come to the conclusion that it is more appropriate for the Eurozone economy to reduce the euro's exchange rate, and will begin to change the current strategy.