The weakening phase of the euro continues, or better yet, the phase of strengthening of the dollar. However, the most likely medium/long-term scenario is not yet very clear. Here are the levels to monitor carefully at the weekly close.
Here are the causes that led to the strengthening of the dollar against all currencies
The dollar gained 0.2% to 105.45 after ten days of volatility caused by mixed economic signals in the United States and political uncertainty in France that rattled European markets. The pound fell after the Bank of England decided not to cut rates, while the Swiss franc fell following the Swiss National Bank cutting interest rates to 1.25%. Corpay’s Karl Schamotta said this central bank easing is improving liquidity expectations in financial markets.
In the United States, the economy is showing signs of slowing with retail sales falling short of expectations in May and signs of a cooling job market, although some strength remains. The pound fell 0.3% to $1.2678, while the dollar rose 0.9% to 0.8922 Swiss francs.
Volatility in currency markets has increased due to political uncertainty in Europe and speculation about central bank rate cuts. Last week, the dollar rose while the euro hit its lowest since May 1, partly on concerns about the French parliamentary elections.
Monex USA’s Helen Given noted that central banks are the real driver of the dollar and that political uncertainty tends to strengthen the US currency. While negative economic data might traditionally weaken the dollar, global political uncertainty continues to support its strength.
Once again the euro-dollar exchange rate does not decide its future: the indications of the graphic analysis
As has been happening for about two months now, the phase of uncertainty on the euro-dollar exchange rate continues. With a weekly close above 1.0865, a bullish reversal could have materialized which could develop according to the scenario indicated in the figure by the dotted line. Bears, however, could find strength from a weekly close below 1.0628. In this decline, the decline could develop according to the scenario indicated in the figure by the solid line.
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