USD strenghtens against GBP and EUR
After losing ground for 13 months in a row, USD is about to break out and gain momentum against both euro (EUR) and sterling pound (GBP), according to technical analysts.
Why is USD gaining ground?
Many European countries economy is weak, with Portugal getting downgraded by Moody’s and Greece are having big problems paying their debt. Italian stock market fell almost 9 % previous week over yield spread concerns.
In fear of rising inflation, ECB increased the interest rates last week, without any positive effect on the exchange rates.
Both USA and British economies remains week, but not as bad as the Eurozone.
What do you think about EUR, GBP and USD? Will USD gain significant against sterling and the single currency?
Hello,
I know this post dates from a few months, but since the USD gained even more ground against these currencies (EUR and GB) after your post was published, I think we can get back to this point once again : Will the USD still gain ground against these currencies?
Before I make my own predictions on the close future on these currencies’ values, let’s see why the USD strenghtened lately. Main reason is Eurozone chaos; let’s face it, there are quite a few countries facing a bailout, and Greece is on the top of the list. Some big banks would take a huge hit if a bailout occurs, and the Euro would definitely stay on its downhill trend. All these worries in Europe make most investors flee this market : I mean, wouldn’t you sell you Euros right now if you had some?
On the US part, in resume, slowing growth is still a major concern. Where are the jobs at? Where are big companies investing their money? Answer : Safe-havens. Treasury bonds yields are at record-lows. People put their money where they think it’s safe. What is another safe value according to people right now? The US dollar, of course! And what if the demand increases wildly? Basics : The value increases against other currencies!
It’s hard to tell what’s next. I think Europe governments will do their best to control the crisis. I wouldn’t be suprised to see the EURUSD trade below 1,30. I think this pair might be bearish for a while. GBP might bounce back against the US in the next few days, but I see it going somewhere between 1,50 and 1,52 in 2 or 3 weeks.
Sincerely,
Marco