13.08.202013:48 Forex Analysis & Reviews: EUR / USD: Dollar's fall kept euro's momentum

On the eve of the largest auction of 10-year US government bonds in history, investors sold $ 38 billion in Treasuries, which helped to increase bond yields and strengthen the greenback.

However, as soon as the United States issued government debt with a relatively high yield, traders invested in bonds, which led to a decrease in bond yields and the exchange rate of the US dollar.

However, there are other reasons why the US dollar is losing ground against major currencies, including the euro. Although the situation with COVID-19 in the US is better than before, the pace of recovery in its economy is still slow. Due to this, Europe is in a better position despite the increase in the number of coronavirus cases in the region.

In addition, American lawmakers still haven't decided on the next package of assistance to the national economy, while the Fed is urging politicians to take action.

San Francisco Fed President Mary Daly said there is still little evidence that high unemployment benefits demotivate people to find work. The head of the Federal Reserve Bank of Boston, Eric Rosengren, in turn, fears that due to the inability of the United States to control the spread of the COVID-19 in the country, the economic recovery may be delayed, and temporary unemployment may become permanent.

Despite concerns about the economic situation in the US, investors are optimistic about the creation of a vaccine against coronavirus.

On Wednesday, the S&P 500 briefly climbed to six-month highs, signaling risk appetite and weakening demand for the greenback.

Thus, in general, the current picture favors the euro and is not in favor of the dollar.

The day before, having touched a local minimum around 1.1714, the EUR / USD pair rebounded sharply from it, rising above 1.18. The bullish momentum intensified on Thursday.

Resistance is located at 1.1850 (last week's support), 1.1915 (two-year high), and 1.2000 (psychologically important level).

Support is at 1.1805 (weekly resistance), 1.1750, and 1.1700.

ING specialists believe that the drivers behind the EUR / USD rally since May this year have not lost their relevance.

"The ability of EU leaders to agree on a single fund for economic recovery in the region has not yet been fully rethought by investors. The rotation of capital into European assets can still provoke an increase in the EUR / USD pair to 1.25 by the end of this year, "they said.