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Mar 24 - 08:36 AM

EUR/USD - COMMENT-A Steeper EUR/USD Drop Is A Good Thing

By Jeremy Boulton  —  Mar 24 - 07:30 AM

EUR/USD's plunge from March's peak was fuelled by fear and a rush for safety nL1N2BH09D.
A relief trade is underway, lifting EUR/USD a little, but if a recovery mindset takes hold EUR/USD should drop nL1N2BH098.
Before the crisis really hit, the dollar broke higher.
EUR/USD would go lower if it was trading normally.
In the wake of the crisis, that should not be forgotten.
The prior gap in economic performance is not likely to close.
Previously weak economies should take longer to recover and stronger economies should recover more quickly.
While uncertainty remains, the dollar as the world's reserve currency should grow in strength nL1N2BH0C5 If the situation improves, the dollar should still rise and a rise based on positive fundamentals should have a longer life span than one based on safety.
Gaps in interest rates may be tiny, but they still exist.
When risk appetite returns, the euro is a more attractive short than the dollar for any who re-invest in higher-yield currencies.

EURUSD: Click here

Refinitiv IFR Research/Market Commentary


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