EUR/USD: Euro on fire as Trump's controversial policies put pressure on US currency
|The single European currency maintains its strong upward momentum for the second day, having broken through the 1,14 level upwards, levels it has not seen in more than three years.
President Donald Trump's controversial policies have created intense concern and many investors have preferred to limit their positions in favor of the American currency.
The '' tariffs dance '' that President Trump has set up in recent weeks remains very high on the agenda, monopolizing the interest of investors, having created enormous confusion about the future.
His eccentric nature and his tendency to change decisions from moment to moment have created great turmoil in international stock markets. There have been phenomena of intense speculation, and although the markets have suffered significant losses recently, we have often observed sharp rebounds, which are always fueled by changes announced by President Trump.
These behaviors have created strong feelings of uncertainty and it is possible that these policies will begin to reduce the credibility of President Trump's economic policy, with the result that the American currency and the debt securities of the American government are under question.
The trade war seems to be overshadowing the real war on the front in Eastern Ukraine. Despite some optimism that had come to the table a few weeks ago, there do not appear to be any further positive developments at the moment.
Apart from the fact that President Trump's policies have reduced America's credibility, creating concern among investors and holders of US bonds, I see no other significant reason for the explosive rally of the European currency.
On the other hand, the high exchange rate of the European currency will certainly at some point concern European officials, as, in parallel with the tariff policy, European products will end up uncompetitive in United States.
I have doubts about the ability of the European currency to maintain this upward momentum but on the other hand in an environment of intense volatility where data changes from moment to moment any thought has significant risks. My thought of positioning in favor of the American currency at levels between levels one 1,11 - 1,12 turned out to be a hasty move but I will prefer to remain on it.
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