The upward momentum of the EUR / USD remains strong: with the rise of today 18 August the euro-dollar marks a new high of 2020 at 1.19633. The euro continues its run in the wake of the persistent deterioration of the greenback, the Dollar Index remains around the lows of the last 2 years.
Last week I wrote Dollar forecast: the downtrend continues and the beginning of this third week of August confirms the forecasts: EUR/USD at its highest since 2018, the US dollar index at its lowest since 2018 around 92.3. Generalized optimism continues to dominate sentiment among investors, all supported by the hope of a coronavirus vaccine and the ongoing economic recovery.
But beware of the recent resumption of trade and technological tensions between the United States and China, re-emerged after the White House hinted at further restrictions on the Chinese telecommunications giant Huawei.
EUR/USD forecast: in the short term it could reach 1,200 levels
The protracted US-China conflict has the potential to trigger occasional episodes of risk aversion, which should provide temporary support to the dollar and thus cause a correction in the EUR/USD. But the dollar forecast remain bearish (and of course the EUR/USD forecast is bullish).
On Tuesday 18 August 2020, the EUR/USD cross broke through the key resistance area at 1.1900, allowing for a continuation of the rise to the year-to-date peak at 1.19633.
If this area is convincingly overcome, the next relevance target is expected to emerge with the psychological level of 1.2000.