EUR Breakout|Reflationary trend[exports driven]|2021 Double-Dip?
Short idea, few things to keep an eye on.
It seems that the EUR is conforming a breakout on the monthly. A decent sign for the recovery of the global economy for 2021, as exporting nations are given the advantage of bouncing back post-covid. However, I do not think that the Euro will sustain above the 2018 highs of 1.25 in 2021 for few reasons.
-> The EU southern states are tourism reliant, and very doubtful that the leisure sector will recover as fast, hence increasingly more stimulus will be needed to sustain these economies. A stronger euro would even further hurt the potential to recover.
-> Post-covid, supply chains are likely going to be disrupted for the long-term, affecting EU exports and further increasing the likelihood of a double dip in 2021.
-> Even though Biden is likely to take a lighter stances on tariffs, it certainly won't be the same as Obama's approach to Globalism, i.e some of Trumps policies are likely to stay.
-> Very unlikely that Dems get a trifecta by taking control of the senate in January, so the levels of stimulus as well as tax amendments won't be as high as currently expected. Overall, dollar bullish.
-> Merkel leaves in 2021, unlike the US, the transition will be orderly, however policies are likely to change, further impacting FX volatility.
-> DXY(EUR > 50% typically) is also pointing out to a weaker dollar, initially at the start of 2021.
This is it for EURUSD, the rest is demonstrated on the chart. The reason I am not long, despite the chart suggesting a bullish trend, is because of the 2021 double dip potential, which is the necessary retest for me to turn bullish on the Euro for 2021-2024. So, let's see how it all turns out in 2021.
-Step_ahead_ofthemarket
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It seems that the EUR is conforming a breakout on the monthly. A decent sign for the recovery of the global economy for 2021, as exporting nations are given the advantage of bouncing back post-covid. However, I do not think that the Euro will sustain above the 2018 highs of 1.25 in 2021 for few reasons.
-> The EU southern states are tourism reliant, and very doubtful that the leisure sector will recover as fast, hence increasingly more stimulus will be needed to sustain these economies. A stronger euro would even further hurt the potential to recover.
-> Post-covid, supply chains are likely going to be disrupted for the long-term, affecting EU exports and further increasing the likelihood of a double dip in 2021.
-> Even though Biden is likely to take a lighter stances on tariffs, it certainly won't be the same as Obama's approach to Globalism, i.e some of Trumps policies are likely to stay.
-> Very unlikely that Dems get a trifecta by taking control of the senate in January, so the levels of stimulus as well as tax amendments won't be as high as currently expected. Overall, dollar bullish.
-> Merkel leaves in 2021, unlike the US, the transition will be orderly, however policies are likely to change, further impacting FX volatility.
-> DXY(EUR > 50% typically) is also pointing out to a weaker dollar, initially at the start of 2021.
This is it for EURUSD, the rest is demonstrated on the chart. The reason I am not long, despite the chart suggesting a bullish trend, is because of the 2021 double dip potential, which is the necessary retest for me to turn bullish on the Euro for 2021-2024. So, let's see how it all turns out in 2021.
-Step_ahead_ofthemarket
________________________________________________________________________________________
>>I do not share my ideas for the likes or the views. This channel is only dedicated to well-informed research and other noteworthy and interesting market stories.>>
However, if you'd like to support me and get informed in the greatest of details, every thumbs up and follow is greatly appreciated!
Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content- contact me through any of my social media channels.
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