empty
 
 
pt
Suporte
Abertura instanânea da conta
Plataforma de negociação
Depósito/Retirada

22.11.202109:10 Forex Analysis & Reviews: EUR/USD: Euro is falling, and the US dollar is restoring this imbalance

Exchange Rates 22.11.2021 analysis

The morning of the new week began for the EUR/USD pair in the "green" zone, although there are still marks from the "red" one nearby. The weakening euro restrains the growth of the US dollar, which influences the upward trend.

The US currency has confirmed its status as a safe haven asset once again. On Monday, it traded near 16-month highs amid increased anxiety about the growth of COVID-19 infections in Europe. The pressure on the euro has intensified after the introduction of complete isolation in Austria. The German authorities are ready to follow the example of their neighbors, which does not add optimism to the single currency. The discussion about the hasty reduction of incentives from the Fed also adds pressure.

This morning, the US dollar took off on the news from Austria, which was the first European country to return strict restrictive measures due to another outbreak of COVID-19. It should be noted that the cases of coronavirus in the country have reached unprecedented values, which have not been observed since the beginning of the pandemic. From February 1, 2022, mandatory vaccination will be introduced in Austria.

The German authorities are ready for similar measures, where the number of COVID-19 cases is growing exponentially, breaking the previous anti-records. An extremely tense situation with coronavirus has been recorded in the Czech Republic, Slovakia, Hungary, and Norway.

The current situation gave a head start to the American currency but deprived the European one to increase. Serious concerns about the prospects of the EU economy brought down the euro, pulling peripheral European currencies with it. This morning, the EUR/USD pair was trading around the level of 1.1276, giving up illusions about a speedy recovery. However, the possibility of recovery is not excluded in the medium term.

Exchange Rates 22.11.2021 analysis

Earlier, ECB Chairman Christine Lagarde said there was a low probability of "conditions for raising rates", which are unlikely to change next year. The refusal to raise rates in 2022 hit the euro hard. Against this background, the US dollar once again felt like a king, ahead of its rival in the EUR/USD pair.

The "dovish" rhetoric of the head of the ECB and the soft monetary strategy of the regulator do not give the euro a chance to rise. If the current policy changes in the future, it may possible increase, but it is unlikely at the moment. In contrast to the ECB, which has fully retained the stimulus measures, the US regulator is ready to tighten the monetary policy due to high inflation. Experts believe that the Fed will pay special attention to the accelerated curtailment of the asset purchase program at the December meeting.

The focus of the markets' attention is the publication of the results of the November meeting of the Fed, scheduled for Wednesday, November 24. It can be recalled that the regulator announced the start of a reduction in asset repurchase. This month, this amount will amount to $105 billion, and in December 2021, about $90 billion. This week, investors are waiting for the Fed's "minutes, due to which they will learn about the further actions of the regulator. It is expected that they will give an idea of inflation risks and conditions for achieving maximum employment in the United States.

According to the financial giants of the global market, US inflation will remain high over the next three years. The implementation of such a scenario will put a lot of pressure on the US dollar. At the same time, the prospect of raising rates next year gives an excellent chance to strengthen this currency. According to UBS analysts, it will peak in 2022 due to the abandonment of the asset purchase program, a reduction in fiscal stimulus in the United States, and a slowdown in the global economy.

Larisa Kolesnikova,
Analytical expert of InstaSpot
© 2007-2024
Benefit from analysts’ recommendations right now
Top up trading account
Open trading account

InstaSpot analytical reviews will make you fully aware of market trends! Being an InstaSpot client, you are provided with a large number of free services for efficient trading.

Não pode falar agora?
Faça sua pergunta no chat.