EUR/USD continues to stretch its legs

The trend of strengthening euro and weakening dollar has returned, as once again this currency cross is above the 1.3600 level.

For a while, markets took the view that tapering of the US government’s $85 billion monthly debt-purchasing scheme could well start in 2013. This thinking coincided with the dip in EUR/USD, back down to 1.3300. Subsequently, with dovishly minded FOMC member Janet Yellen confirmed as the Federal Reserve chairwoman-in-waiting and dovish comments from a number of voting members, opinion has generally changed.

The European side of the equation has to a greater or lesser extent been overlooked by the markets, which instead appear preoccupied by the US economic position.

We are now just over a week away from US president Barack Obama tackling the US budget again. The stagnation in the two major US political parties in agreeing a longer-term strategy has been very disappointing, and there have been precious few soundbites from either party to give the markets confidence that anything has changed since the last time they tried to address this issue.

All of this goes some way to explaining the dollar weakness, and points towards further devaluation ahead. This is likely to remain the case until the US looks like a country capable of deciding its longer-term economic policies.

Spot FX EUR/USD chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.