Euro / U.S. DollarShort
A stronger dollar means a weak euro
Looks like usd is performing euro and if this rally continues we can see eur/usd going much more lower like 1.12 before making decent pullbacks
The continuing prospect of a substantial pandemic relief package in the US, along with the relative success of the country’s vaccination program, have combined to raise hopes that the US will lead the global economy out of the slump caused by the spread of Covid-19 but also to increase fears of a jump in inflation. Those fears have raised the yields on US Treasury bonds and notes, strengthening the US Dollar against most other currencies and, with few signs yet that the climb in USD is coming to an end, the consequent weakness in EUR/USD so far this year looks set to persist in the week ahead
That being said, there are threats to EUR/USD strength that should be considered. First and foremost is the staggering economic projections coming out of the United States. Should reality match estimates, the United States would handily outpace the Euro area in terms of recovery and growth – a theme that would likely give rise to US Dollar strength.
Another concern is risk aversion. US equities are encountering considerable turbulence in recent sessions as US Treasury yields continue to tick higher, prompting investors to reallocate funds as risk-free rates rise. If equity weakness were to gain steam and risk aversion spike, traders may flock to the Greenback in search of safety.
Together, the two fundamental possibilities pose a real threat to the continued uptrend of EUR/USD, but the technical outlook remains encouraging and further stimulus in the United States could see prolonged USD weakness. Thus, Dollar strength is not a foregone conclusion by any means and EUR/USD gains remain on the table.
The continuing prospect of a substantial pandemic relief package in the US, along with the relative success of the country’s vaccination program, have combined to raise hopes that the US will lead the global economy out of the slump caused by the spread of Covid-19 but also to increase fears of a jump in inflation. Those fears have raised the yields on US Treasury bonds and notes, strengthening the US Dollar against most other currencies and, with few signs yet that the climb in USD is coming to an end, the consequent weakness in EUR/USD so far this year looks set to persist in the week ahead
That being said, there are threats to EUR/USD strength that should be considered. First and foremost is the staggering economic projections coming out of the United States. Should reality match estimates, the United States would handily outpace the Euro area in terms of recovery and growth – a theme that would likely give rise to US Dollar strength.
Another concern is risk aversion. US equities are encountering considerable turbulence in recent sessions as US Treasury yields continue to tick higher, prompting investors to reallocate funds as risk-free rates rise. If equity weakness were to gain steam and risk aversion spike, traders may flock to the Greenback in search of safety.
Together, the two fundamental possibilities pose a real threat to the continued uptrend of EUR/USD, but the technical outlook remains encouraging and further stimulus in the United States could see prolonged USD weakness. Thus, Dollar strength is not a foregone conclusion by any means and EUR/USD gains remain on the table.
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