US and European currencies began the new week without much stress, but many experts believe that this calm is temporary. In the current situation, the euro may benefit and bypass the dollar for some time. At the same time, the greenback should not lose sight of the threat of weakening, analysts said.
Earlier, the US currency was the undisputed leader in the EUR/USD pair. However, now the situation may not be in favor of the greenback: a number of currency strategists believe that he should fear a forced weakening by the Federal Reserve. Recall, recently, the Fed, in addition to lowering interest rates, launched a program to buy assets. The regulator met the wishes of US President Donald Trump, and the next step, according to experts, will be a forced "landing" of the dollar. It turns out that the greenback and the euro switched places for a while: now the single currency may be on the horse, and the dollar will have to be content with a secondary role.
Nevertheless, experts urge not to worry about the future fate of the greenback. Currency strategists at JP Morgan, the largest bank, are confident that the Fed's actions in this direction will not be too fast. They believe that upward pressure on short-term rates will continue, which will support the US currency. However, when viewed globally, weakening the greenback is a priority for the United States and will be addressed. It is still difficult to predict the methods of solution, nevertheless, experts believe that the weakening of the dollar has already begun due to manipulations in the financial markets.
Against this background, the European currency looks much more positive than the dollar. Last Friday, analysts recorded a rise in the euro due to an improvement in risk sentiment caused by optimism regarding the successful resolution of the trade dispute in the US and China. If the parties come to a compromise, then the chances of the euro's growth will double, analysts said. Risk appetite, played during the bidding process, could raise the single currency to 1.1600 next year, they said.
The EUR/USD pair was trading in a moderate range of 1.1062–1.1063 on Monday morning, November 18. However, after some time, the volatility in the pair intensified, which provoked a slight decrease.
Later, the pair went to the level of 1.1060, but did not stay there long. Upward sentiment prevailed in the EUR/USD pair, and the pendulum swung upward. The classic pair reached 1.1067, but the desire for the next peaks was suspended.
Currently, the pair has returned to its starting point, to 1.1061–1.1962. However, experts believe that the pair will not stay long in this range.
According to the calculations of analysts, in case of overcoming the level of 1.1069–1.1070, the pair will be able to achieve a high level of 1.1110–1.1120. However, a further fall will increase the risk of correction and collapse to 1.1030, experts said.
The situation in the financial market may be tense for the US dollar, and fortune will favor the euro for some time, analysts said. However, in the long run, chances that the greenback will recover are still higher than that of the euro. The single currency will retain its strength, but the dollar will not take offense, continuing to defend its position even in the event of a slight drawdown due to a possible weakening.