Euro / U.S. DollarShort
EURUSD: The Trump Effect and the Euro Falling to Yearly Lows
The recent re-election of Donald Trump has impacted the currency market, with a strong boost to the US dollar putting pressure on the euro. The EURUSD has continued the downward movement and this week has helped pierce the yearly lows, falling to 1.0599, consolidating a downtrend. This level marks a pullback towards the October 2023 lows at the 1.04506 support zone, a key threshold which, if broken, could accelerate the euro's decline. RSI is currently at 27.58%, which confirms oversold conditions, so that the euro is likely to fall further.
The dollar's strength against the euro responds to rising expectations of expansionary fiscal policies in the US, which generates inflation prospects and could affect the Federal Reserve's interest rate decisions. In the case of Europe, the pressure on the European Central Bank (ECB) to sustain a restrictive monetary policy is increasing, although the slowdown in Eurozone growth limits its options.
Other European Currencies
- Pound Sterling (GBPUSD): The pound has lost ground, falling below its 100-day moving average on October 18 and about to fall below the 200-day moving average, confirming a possible fall to the 1.25915 mid-zone.
- Swiss Franc (USDCHF): The dollar has also outperformed the franc, with the USDCHF advancing towards 0.8890 as investors seek refuge in the stability of the dollar in the face of European uncertainty, so it appears that the current momentum is pushing the franc towards its mid-zone this year.
- Norwegian Krone (USDNOK): The Norwegian currency faces strong resistance at 11.13, with support at 10.85. The USDNOK's upside could continue if weakness in the energy market pressures the Norwegian economy at least to its current high zone at 11.31451.
Pacific currencies
The Australian dollar (AUDUSD) and New Zealand dollar (NZDUSD) remain at low levels, with lows at 0.64755 and 0.58699 respectively. Although both currencies have shown slight signs of support, downward pressure persists. A break above the 0.6548 (AUD) and 0.66068 (NZD) checkpoint (POC) levels would be required for a positive turnaround.
Conclusion
The US dollar has gained strength on expectations of increased fiscal spending under the new Trump administration, supporting its position against major global currencies. The fall in EUR/USD, along with pressure on other European currencies, underscores the impact of this expansionary policy on the global financial landscape. In the short term, the dollar remains the strong currency as Europe faces challenges to sustain its support levels.
Ion Jauregui - ActivTrades Analyst
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
The dollar's strength against the euro responds to rising expectations of expansionary fiscal policies in the US, which generates inflation prospects and could affect the Federal Reserve's interest rate decisions. In the case of Europe, the pressure on the European Central Bank (ECB) to sustain a restrictive monetary policy is increasing, although the slowdown in Eurozone growth limits its options.
Other European Currencies
- Pound Sterling (GBPUSD): The pound has lost ground, falling below its 100-day moving average on October 18 and about to fall below the 200-day moving average, confirming a possible fall to the 1.25915 mid-zone.
- Swiss Franc (USDCHF): The dollar has also outperformed the franc, with the USDCHF advancing towards 0.8890 as investors seek refuge in the stability of the dollar in the face of European uncertainty, so it appears that the current momentum is pushing the franc towards its mid-zone this year.
- Norwegian Krone (USDNOK): The Norwegian currency faces strong resistance at 11.13, with support at 10.85. The USDNOK's upside could continue if weakness in the energy market pressures the Norwegian economy at least to its current high zone at 11.31451.
Pacific currencies
The Australian dollar (AUDUSD) and New Zealand dollar (NZDUSD) remain at low levels, with lows at 0.64755 and 0.58699 respectively. Although both currencies have shown slight signs of support, downward pressure persists. A break above the 0.6548 (AUD) and 0.66068 (NZD) checkpoint (POC) levels would be required for a positive turnaround.
Conclusion
The US dollar has gained strength on expectations of increased fiscal spending under the new Trump administration, supporting its position against major global currencies. The fall in EUR/USD, along with pressure on other European currencies, underscores the impact of this expansionary policy on the global financial landscape. In the short term, the dollar remains the strong currency as Europe faces challenges to sustain its support levels.
Ion Jauregui - ActivTrades Analyst
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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