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Although it appears down this week from a peak of more than two months marked on Monday, the EUR/USD currency pair shows a trend generally upward for the past two weeks, and this trend could continue, according to Deutsche Bank (DE:DBKGn).
In a note to the analysis, the bank believes that the u.s. dollar has reached a peak, and the Euro has hit a low point in which he should raise, based on its expectations in terms of monetary policy of the Fed and the ECB.
According to the bank, european interest rates are already close to their floor in Europe, which leaves little room for further rate cuts from the ECB. In addition, the data on manufacturing in Europe and in other markets at the extremes, a bounce seems likely. The bank also notes that the markets are not expecting much in the way of Germany, which implies a potential for a positive surprise.
In the case of the United States, the Deutsche Bank expects three more interest rate cuts from the federal Reserve over the next two quarters. In addition, according to the bank, the u.s. economy will slow down, from 2.2% in 2019 to 1.5% in 2020.
“The only reason we do not expect a recession, pure and simple, is that policy responses should be timely and substantive. In the foreground, we expect the Fed to reduce its rate three more times over the next few months. Even if the limits of monetary policy are achieved in many areas, the areas which still have space deploy it, ” said the team of Deutsche Bank.
From a graphical point of view, it should be noted that, in the short term, the Euro-Dollar faces resistance at 1.1180, before 1.12 and 1.1250.
Downward 1.1080-1.11 is the first area of critical support, before the threshold of major psychological of 1.10, a threshold under which it may be considered that it is the sellers who control the market.