Summary
Diverging economic fundamentals and interest rate policies between the European Monetary Union and the United States drove the 25 percent appreciation of the dollar from last May until early March. The fall in the united currency was steeper, though by not much, than the 23 percent collapse of the euro in the summer and fall of 2008 as the financial crisis exploded on the world financial system. In the 40 years since the Bretton Woods fixed rate system ended the dollar has only seen one steeper ascent. In the early 1980s then Federal Reserve Chairman Paul Volker pushed U.S. interest rates to 20 percent in a successful throttling of inflation. The euro equivalent basket fell 60 percent against the dollar, but it took five years. The steepest part of that decline a 33 percent fall took 14 months. The euro’s recovery since the middle of March has more profit taking in it than a change of tenor for the currency. What factors might change the prospects for the euro? Is the Fed’s evident reluctance to hike rate undermining the dollar? Will the slowing U.S. economy force the dollar down? What role will the world economy play in the euro-dollar drama? Join us for a wide ranging discussion of the six month macro outlook for the dollar and the euro.Latest Live Videos
Editors’ Picks
AUD/USD meets support near 0.6950
AUD/USD retreats for the second straight day on Tuesday, this time breaking below the 0.7000 level to hit new four-week troughs. The intense sell-off in the Aussie comes in response the continuation of the move higher in the Greenback, helped by robust safe haven demand amid geopolitical crisis.
EUR/USD looks to regain the 200-day SMA
EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis
Gold bounces off lows, back above $5,100
Gold remains on the defensive, eroding part of the recent multi-day advance and managing to trade back above the $5,100 mark per troy ounce on Tuesday. The precious metal initially dropped just below the critical $5,000 threshold on the back of the persistent strength of the Greenback, higher US Treasury yields across the curve and investors' repricing of Fed rate cuts.
XRP risks extending losses as US-Iran war rages on
Ripple (XRP) has come under pressure, drifting lower to $1.35 at the time of writing on Tuesday. The over 2% correction looks poised to erase the previous day’s gains, which lifted the remittance token to $1.42.
Energy shock 2.0: Why rising Gas prices could hit the Euro Premium
Even without a confirmed, sustained disruption, the mere risk to a key global energy chokepoint is enough to inject a significant premium into European Gas markets. And for the Euro, that matters.
Here is what you need to know on Tuesday, March 3:
The US Dollar continues to gather strength against its rivals following Monday's bullish action, with the USD Index fluctuating at its highest level since late January above 98.80 in the European morning on Tuesday. The European economic calendar will feature preliminary February Harmonized Index of Consumer Prices data later in the day. Nevertheless, market participants will remain focused on news surrounding the crisis in the Middle East and pay close attention to comments from central bankers.