Euro shows unexpected safe haven strength – Rabobank
|Following President Trump's tariff announcement, the euro has shown surprising resilience, acting more like a safe haven currency alongside the Swiss franc and Japanese yen. Amid rising global uncertainty and shifts in investor sentiment, current account dynamics and political developments in Europe have helped support the euro's performance, Rabobank's FX analyst Jane Foley reports.
Pound struggles as euro gains ground
"Since US President Trump detailed his tariff policy on April 2, the EUR has been doing a very good impression of a safe haven currency. In the period since the Rose Garden address it has been the third best performing G10 currency after the CHF and the JPY, both of which are long established safe havens. There is one key fundamental that all three of these currencies share, that of being associated with current account surpluses in each of their respective countries."
"The consensus view is that the EUR lacks the fundamentals that would make it a real safe haven. The single currency is only 25 years old, and its brief history has a strong association with a major debt crisis. The latter can be taken back to the question that has dogged the EUR since before its inception - whether monetary union can be permanent situation without closer fiscal and debt ties between member countries. "
"There have been short pockets of time in the past twenty years or so when the pound has adopted some safe haven behaviours. These, however, are likely better described as periods when investors have been looking to diversify their European exposures. While it would not be surprising for the EUR to give back some of the gains made in the past few days, we have adjusted our EUR/GBP forecasts higher and now see the currency pair at 0.85 on a 6 month vs. compared with a previous forecast of 0.83."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.