EUR/USD. Donald Trump vs Joe Biden vs "Coronavirus". The American president dug a hole himself.

24-hour timeframe

On the Forex market, another trading week has ended, during which the European currency has risen in price in an unprecedented way in pair with the US currency. If you do not take into account the first six weeks of the “coronavirus” epidemic, when almost every currency was thrown from side to side by hundreds of points, it is difficult to even remember the last time the euro increased so strongly and quickly. As we have already said, the reasons for this strengthening of the euro currency are ambiguous. If we take into account the fact that the pound has also become more expensive, we can conclude that the US currency has fallen. If this hypothesis is correct, then why, for example, the Swiss franc fell in price over the past week much more modestly? Why is the Japanese yen generally cheaper against the dollar? It turns out that rallies and protests in the US do not have such a strong impact on the demand for the dollar. Or do market participants sell the dollar based on these events, and buy only the pound and the euro, although in this case, the question remains: why do they buy the pound, which is clearly one of the weakest currencies in recent years with absolutely vague prospects? There has been no reason to cheer from the UK in recent weeks, so why is the pound in demand? In general, what is happening now in the market is very difficult to explain logically. Yes, formally, any movement of any pair can be “tied” to some fundamental or macroeconomic event, however, this is more called “pulling by the ears”. No one denies that the events in the US have had an impact on the foreign exchange market, but this impact is very ambiguous.

Since we have already figured out that the rallies and protests in the United States, caused by another racist scandal, are not the main reason for the fall of the dollar, it remains to find out what is the reason? And there are quite a large number of topics claiming to be “reasons”. First, we believe that for the rest of 2020, the most important topic will be the election campaign and the US presidential election. If you try to judge from the US side, it will be better if Donald Trump loses the election. The current US president is an excellent businessman, but as the leader of the nation, he is unlikely to be remembered by Americans with a good side. Further US foreign policy will depend on whether Trump wins or loses (Joe Biden can count on establishing ties and dialogue with China), which is now expressed in the phrase “we will threaten everyone, let everyone dance to our tune”. We can all clearly see what this strategy has led America to. Secondly, while the US president has not yet been replaced, this is the topic of the confrontation with Beijing, which is getting hotter and hotter every day, but it has not yet “exploded”. Today we will focus in detail on the first topic.

If the whole world was not covered by the epidemic, then America would have already begun and was preparing for elections. It’s time for both presidential candidates to travel around the states, hold rallies, and attract voters to their side. However, the coronavirus pandemic has made its adjustments. Before the outbreak of the epidemic, Donald Trump’s ratings were high, however, Joe Biden was also nearby. When the epidemic began, Donald Trump poured arrogant statements in his style every day and in all directions. Then the American president said that the virus will not survive even April. Then the US leader said that the Americans have nothing to fear. However, as it turned out just 2 months later, there was something to fear. The number of deaths from the COVID-2019 virus in the United States at the moment is about 100 thousand people. Also, at least 25 million people lost their jobs in the country due to the quarantine. The US Congress and the Fed had to pour trillions of dollars into the economy, while Donald Trump continued to pour statements in the style of: “I will build a country even stronger than it was before the pandemic.” But even though the current crisis is visible to the naked eye, and is visible to every American, Donald Trump still had fairly high political ratings, about 45-49%. That is, literally until recently, most Americans were happy with the way the authorities cope with their responsibilities. However, after Trump began actively promoting the idea of restarting the economy and ending the quarantine, his support among the population began to decline. Here you should understand the motivation of ordinary Americans. No one wants to risk their health and the health of their loved ones at a time when the pandemic has not even begun to wane. Thus, the decision of the leader of the nation to open most of the states and reopen most of the enterprises was not received by the Americans “with a bang”. Of course, some were happy about the end of the quarantine, but most people still understand the danger of such measures. And what do we see now, a few weeks after the US economy eased quarantine measures? According to the Johns Hopkins Institute, the disease growth curve in America continues to steadily show an increase. That is, the rate of growth of the virus spread across the ocean is not slowing down, and the total number of cases of diseases is already 1.9 million. For example, in Spain and Italy, the most affected EU countries, the authorities first waited for clear signs of slowing the spread of infection and only then began to ease the quarantine. As a result, the “contagion curves” in these countries go sideways, meaning that the spread of the virus slows down. There are fewer and fewer new cases of infection.

Thus, there is already an opinion that Trump hastened to “open” the US economy, and this rush will cost new lives to Americans. Well, the racist scandal that broke out in the United States in recent weeks showed Trump again not on the best side. First, according to polls, most Americans consider Trump a racist. Secondly, the US president proposed to disperse peaceful protestants and protesters with the help of the army, showing his utter disrespect for human rights. Well, the main competitor of Trump in the election race, Joe Biden, has been in the shadows all this time, only a few times giving interviews to various media and television. And according to the latest sociological research, it is Biden’s ratings that are the highest. By and large, it turns out that Donald Trump “dug a hole” for himself. And Joe Biden has done nothing to increase his support among the electorate. However, Trump’s ratings have fallen and Biden’s have risen. So, if there is anyone to bet on now, it is the democratic candidate. Biden’s only downside is his age. In the fall, the Democrat will “turn” 78 years old.

Trading recommendations:

On the 24-hour timeframe, the euro/dollar pair worked out the resistance level of 1.1381 and rebounded from it, starting the long-awaited correction. Thus, the correction movement to the critical Kijun-sen line may continue in the new trading week. Further upward movement of the euro currency is still in doubt. However, overcoming the level of 1.1381 (or signals from the 4-hour timeframe) allows traders to trade again for an increase with the goal of 1.1618 (or goals for the 4-hour timeframe).

Source: EUR/USD. Donald Trump vs Joe Biden vs "Coronavirus". The American president dug a hole himself.

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