Friday, June 29, 2018

ECB policy and trade war send Euro down

  • Dollar
  • Euro

The Euro driven lower by recent ECB decision to maintain current interest rates up until summer 2019 or beyond and the trade war blow up ultimately leading to a currency war under US president Trump’s protectionist agenda whereas devaluing the USD happened to be the perfect option to offset America’s losses.

These factors led the Euro to levels of 1.15 against the USD & if the decline persists and reaches below 1.1440, a significant downward wave may be formed towards levels of 1.08 at a rate of approximately 600 points and then the Euro may return to previous levels seen back at April 2017.

In the same context, chances are that the US will intervene to curb the strength of the USD that may reach high levels enough to take Trump back to square one and affect the deficit. With the US imposed tariffs the trade deficit was reduced by 4 billion dollars in May, allowing the US to move forward in this path. “America first” holds an unfearful stance to be independent no matter the consequence, Proving that priority is reducing the deficit and offsetting the loss of the US market.

The US is currently witnessing a golden age in its economic movement, in wages, jobs and industrialization, which increases the flow of liquidity towards the purchase of the dollar and after all the financial market is much bigger than any kind of intervention.