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Euro – dollar: growth and monetary policies is what separates the two currencies

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Euro – dollar: growth and monetary policies is what separates the two currencies

There are not many movements in recent times in the relationship between the euro and the dollar, but all those that occur fall on the negative side of the common European currency. And a good part of this is undoubtedly due to the position that remains due to the war effect, only accounting for what we have been in a warlike conflict.

The Union’s dependence on Russian oil and gas, which is trying hard to correct itself – and to show the agreement with the United States after Biden’s visit to Europe last week – and the rise in inflation to 5.9% in its last data in single currency countries, leave that sign of weakness in the eurowhich sees how, in data from the OECD, the first impact, and the most pronounced for world economies, will be a negative growth of 1.4% in average in the countries of the area.

That repercussion on growth that was expected to be robust and that will now have to be revised downwards, is only the immediate effect, while, in the United States, analysts, for example, from Morgan Stanley, see that the US economy will be robust enough to deal with fears of stagflation and ward off the possibility of recession. OR the words of Janet Yellen, ExFEd and current Secretary of the Treasury who sees robustness in the US GDP in the face of the global slowdown.

They also do it from Europe, from the ECB the member of its Governing Council said it, Mario Centeno who rules out a recession for the eurozone, even though the conflict in Ukraine has exacerbated inflationary pressures.

On your stock chart we see that in the last five sessions it falls by 0.63% and it is placed below the psychological level of 1.10 units against the dollar. The falls for the month are 2.6%, with quarterly cuts for the euro of 3% while so far this year the decrease of the single currency against the greenback in the market reaches 3.44%.

Euro dollar annual value quote

Euro dollar annual value quote

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But the other great derivative passes again through the divergences in their paths that the central banks show. From the FED Jerome Powell will tackle inflation flatly, or at least he will try, as he has said, if necessary with aggressive rate hikes that analysts already rule out, it will be up to 50 basis points in Mayafter the first rise in March of 25bp for US interest rates since 2018 and the end of the purchase of debt.

In the Eurozone, in the ECB, everything is going much more slowly. There will be a more drastic cut in the second financial relief program in the purchase of debt, but, although it is on everyone’s mind, nobody is talking about a rise in interest rates, although experts discount a rise as early as 2022, despite the one that is falling It’s more. Isabel Schnabel, a member of the ECB Board, points out that even, if a deep recession were to come, the asset purchase program could be extended beyond the summer. So it does not seem that the positions within the Euro Tower in Frankfurt converge.

From ING they emphasize that these are divergences from one and the other of the Atlantic are the ones who first keep both currencies in a narrow range, with and dollar that resists the expected rise in tips from the FED. But that all of them, the risks of war, high energy prices and the differences between the Federal Reserve and the ECB are what keep the euro weak.

According to the Investment Strategies indicators, the EURUSD barely reaches, in bearish mode, a score of 1.5 points out of 10 possible for the value in the market. With both medium and long-term downtrend for the relationship between the two currencies, negative slow and fast total momentum. With mixed turnover, long-term growth and declining long-term growth and volatility that seems to be rising in the medium term and declining in the long term

EURUSD technical analysis of Investment Strategies with their indicators

EURUSD technical analysis of Investment Strategies with their indicators

The euro that from Unicredit looks very stopped in its intersection with the dollar because the PMIs that were known for the Eurozone corresponding to the have not registered the expected levels, especially in Germany to boost purchases of the European currency, due to the problems in the supply chains due to the high prices of gasoline and the shortage of chips.

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