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01.09.2020 05:22 PM
Euro rapidly rises reaching highest level after two years

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The euro rapidly went up on Tuesday morning which allowed it to quickly reach the highest levels over the past two years. The reason for this enthusiasm was mainly due to the rise in the stock markets of the region, which in turn occurred against the background of positive statistics on the growth of the European economy. Market participants were caught between two fires. On the one hand, they were cheered by clear signs of a gradual recovery in the economic development of the European region after the crisis associated with the impact of coronavirus infection. On the other hand, they were pressed by fears that the governments of European states intend to curtail the main package of aid provided in order to support the economy, which found itself in a difficult situation.

Initially, the euro managed to reach a record high of $ 1.1999. Note that the pair ended at $ 1.1936 during the previous trading. This makes Tuesday's leap the highest in more than two years. However, it did not manage to go beyond the $ 1.20 mark, which may indicate an option barrier. Nonetheless, there are also positive aspects in this: after some correction, this barrier will be overcome, which means that the growth of the euro will continue in the near future.

In general, the euro is facing rather favorable times at present. This is primarily due to the rather aggressive new policy of the US Federal Reserve System. After the regulator announced the move to targeting average inflation in order to improve the country's employment sector, it had more leeway to act to keep interest rates at record lows for an extended period. Of course, this played a cruel joke with the US dollar, which is already experiencing difficulties and is now under enormous pressure. The bearish trend in relation to the dollar is now more relevant than ever, which means that the euro has good support.

Meanwhile, Democrats and Republicans cannot agree on a new portion of incentives for citizens of the country who have lost their jobs. The disputes in this matter erupted with renewed vigor leaving the Democrats to start accusing their opponents of deliberately delaying the entire process. There is nothing left but to close the federal government on October 1 due to the impossibility of making a single decision on the issue. Foreign exchange market participants are already tense in anticipation of the ratification of this aid program, and now they are completely confused.

Most analysts are confident that the euro has no choice but to continue its rapid rise further. This means that the foreign exchange market may witness another rally of the euro, which may lead to new record levels.

Maria Shablon,
Analytical expert of InstaForex
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