Senior Economic & Technical Adviser
1 EUR Equal 1 USD so why and what is the next?
An analysis by Bloomberg Agency indicated that one of the main factors of the current weakness is that Europe suffers the most from the war in Ukraine, which sparked an energy crisis and could lead to a long and deep recession. This puts the European Central Bank in a difficult position, as it tries to curb inflation and ease the economic slowdown, and aims to raise borrowing costs for the first time since 2011. Meanwhile, the US Federal Reserve is raising interest rates faster. This makes the yields on US Treasuries higher than Europe's debt yields, driving investors to the dollar and away from the euro.
Moreover, according to the analysis, the dollar is benefiting from its safe-haven status, which means that as the war continues and the repercussions worsen, the euro will continue to slide.
The EURUSD pair resumed the decline clearly, to reach our main awaited target at 1.0000 now, and we expect the continuation of negative pressure to surpass this level and achieve an additional decline that reaches its next target, 0.9940.