The dynamics of the European currency continues to alarm analysts. Most of them stubbornly predict the fall of the euro. However, the situation may unfold in such a way that after some time the single currency will be able to rise.
The European currency again disappointed market participants last Friday, plummeting to a new three-week low against the American one. The EUR/USD pair dipped 0.2% to 1.1028, the lowest level since mid-October 2019.
On Monday, November 11, at some point, the pair showed even more negative dynamics, reaching 1.1031.
Amid a weakening euro, the greenback perked up and reacted positively to the news of the cancellation of a number of tariffs between China and the United States as part of a possible trade ceasefire. Recall that representatives of both powers said they agreed on the mutual abolition of duties on each other's goods in connection with the possible start of a "first phase" trade deal.
According to preliminary estimates, the market situation will remain favorable for the dollar, most stocks and other risky assets. The reason for this, experts believe, is a decrease in tension in the trade war between Washington and Beijing. However, a drop of tar in a barrel of US-Chinese "honey" could be a recession in the German economy. At present, experts consider the statistical data received from Germany to be relatively positive, but signs of weakening are still present. Analysts urge the authorities of Germany not to relax and take appropriate incentive measures, but the German authorities do not see this as necessary. They believe that the risk of a recession is not too great, and if a recession occurs in the German economy, it will be short-lived.
The current situation significantly weakens the single European currency, analysts said Last week, the euro systematically surrendered to the greenback, and the trend continued at the beginning of this week. The situation can be corrected by strong data on German GDP, analysts said. This will give an acceleration to the European currency, which it lacks.
The cautious optimism regarding the euro" that emerged after the new head of the ECB took office, Christine Lagarde, was replaced by disappointment. Many analysts do not expect anything good for the euro, and some still hold out hope. At the same time, the position of the new head of the ECB regarding monetary policy remains unclear, although, according to preliminary estimates, it will remain in the "soft" range.
Short-term prospects for the European currency will not soon change from gloomy to more rosy, analysts said. Tensions are added by the fact that at any time the United States may decide on car tariffs not in favor of the EU. If this scenario is realized, the euro will receive an additional blow, after which it will be difficult to recover.
At the beginning of this week, the euro made an attempt to overcome the negative trend. In the morning, the EUR/USD pair ran in the range of 1.1021–1.1022, but could not stay within this framework.
Subsequently, the pair headed to the levels of 1.1026–1.1027, repeating the events of the end of last week. Analysts have recorded a clear trend towards subsidence.
At the moment, the EUR/USD pair reached the level of 1.1033, but quickly leveled off. Now the pair is trading within the range of 1.1029–1.1030, which keeps the market in suspense. Few people hope for a favorable outcome for the euro, but excessive discouragement is also not observed.
The near future for the euro is seen by analysts in dark colors, but in the distant future, everything may not be so gloomy. Analysts believe that the single currency will be able to "steer" from a sharp turn, where it strengthened the dollar. Few experts put the euro on the rise, but many are confident that the euro will still show its best.
