At the end of December, the Euro rose due to the widespread weakening of the dollar

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At the end of December, the Euro rose due to the widespread weakening of the dollar. However, the monthly chart shows the pair EURUSD remained in line with the bearish trend, sitting near the lows of mid-2017 as highlighted in the approach to the mark of 1.12. Quotes are actively stretched to around 1.15, but was unable to challenge resistance, the integrity of which the currency was not broken for over two months.
If to speak about prospects of the Euro next year, there is an upside and downside risks. By the end of the year, the markets suddenly faced with the threat of a slowdown in the European economy. The proof, based on data from Markit, reflecting the slowdown in business activity in December to the lowest level in more than four years. Amid worrying economic signals investors who had previously expected the first rate hike of the ECB in the fourth quarter of 2019, are now reviewing their expectations and I doubt that the transition to a tighter policy would be appropriate until 2020.
Throw in the uncertainty that comes not only from protectionism to trump, but also from France, which is likely to slip into recession, from Italy, where there are continued concerns about the credit crisis and Britain in the context of Brekzita and its consequences – the official exit from the EU should be held in March. In the end, is not very favourable picture for the single currency.
But let’s not forget about the mood on the dollar that could, if not erase, then mitigate the impact of the above factors. While the Federal reserve does not step back from its intention to raise rates further, though more moderate pace. At the December meeting, the regulator has let know that will not stop tightening until the economy will not serve real threat signals, while inflation will slow sharply. If this does not happen, the us Central Bank will continue to go well ahead in the context of a normalization of policy that will hold the dollar.
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Michael Mashchenko,
Analyst social network for investors
eToro in Russia and the CIS