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The euro is on its way to its best week against the dollar from the world financial crisis, since investors are committed to Germany’s historical fiscal stimulus will help boost an economic recovery in the Eurozone.
The single currency has risen more than 4.5 percent against the dollar this week, its greatest increase since 2009, in the prospects of a rebound in Europe, as well as the aggressive commercial policy of Donald Trump, he raises concern about the health of the US economy.
The Lightning demonstration in the euro occurs after Friedrich Merz, Chancellor of Germany, announced an agreement to finance investment in defense and infrastructure, while European leaders prepare to assume more the burden of security and support of Ukraine of the region.
The European Central Bank reduced interest rates to 2.5 percent on Thursday, but pointed out a possible slowdown in future cuts. After the ECB movement and the stimulus plan of Germany, the merchants are now scadled only a cut this year, below two one week.
“Trump has effectively pushed into European cooperation that none of us had on our bingo cards,” said Adam Pickett, head of Macro Global Strategy at Citigroup. “It is a change of game for interest rates in the future. . . The ECB may need to cut less. ”
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The perspective of a faster eurozone expansion is to support the single currency as well as a series of US economic data. And the growing fears on the impact of Trump’s erratic tariff policies have reached the dollar.
According to the levels in the Swaps markets, merchants now expect the Federal Reserve to make three reductions of interest rates of a quarter point this year compared to the expectations at the beginning of the year for less than two.
“There was the opinion that the United States would almost be immune to tariffs. . . But instead, now there is much more uncertainty, ”said Picktt.
The euro was strengthened more after the monthly US jobs report, published on Friday, showed that the economy added 151,000 positions in February, below the 160,000 expected by economists, before giving up some of the profits.
The single currency increased 0.7 percent to $ 1,086 in the afternoon negotiation, its strongest level since the beginning of November.
Its resurgence marks a dramatic reversal of its weakness after Trump’s electoral victory in November, when the dollar recovered in the hope that the president of the United States president for tax cuts and deregulation drives the US economy.
Several investment banks have now increased the previous predictions that the euro could fall in parity with the dollar.
Until this week, economists hoped that the German economy, the largest in the eurozone, stagnates this year, with a weight of the euro. Goldman Sachs analysts said the economy could expand up to 2 percent next year if the fiscal package was rapidly implemented, above an earlier prognosis of 0.8 percent.
In a sign of the wide weakness in the dollar, the US currency is close to renouncing all the profits against other important currencies that it had done since Trump’s electoral victory.
“The street is becoming quite optimistic in the euro now. . .[it is]It’s hard not jumping on the car, ”said Brad Bechtel, a Jefferies analyst.
