USD vs EUR. Table of Contents

EUR vs USD: Which Currency Will Win in the Short Term?

EUR vs USD: Which Currency Will Win in the Short Term?

EUR/USD has recently got under pressure but is holding above 1.19 because:

  1. The US bond yields jumped above 1.75% even though the Federal Reserve said that it wasn’t planning to raise rates anytime soon. This supports the USD.
  2. Europe’s economic recovery is behind the American one. This supports the USD.
  3. The European Medicines Agency has once again given the green light to AstraZeneca COVID-19 vaccines in the EU countries. This supports the EUR.

The mixed factors will keep influencing the pair in the upcoming days, so there will be sensible to focus on the intraday opportunities in EUR/USD.

The USD is holding on to the bullish trend and getting stronger, while the EUR wants to leave all the problems behind its back to resume rising against the dollar… So which will win the tug of war this week?

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The Dollar Index

The dollar index, which measures the performance of the greenback against a basket of six currencies, gained additional strength by the end of last week and closed above 92.00 levels, supported by higher bond yields.

What are the motives that support the dollar’s strength?

  1. US 10-year bond yields keeps rising as the Fed continues ignoring it and interprets the moves as a sign of a healthy recovery. Yields at the end of the week stopped at 1.73%, near recent highs of 1.75%.
  2. The better-than-expected performance of the US economy versus its European counterparts.
  3. Trade tensions between the United States and China return to the scene for the first time under Biden’s administration.

The dollar index started this week, up 0.29% at 92.13. If the index breaks through 92.50, this will open the way for 92.68 (the 200 SMA), and more rising. – Breaching these levels could turn the outlook positive and allow more gains in the short term.

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Pressure is mounting on the EURO

The Euro is still under pressure since it reached a peak of $1.1985 on March 17. Bears continue dominating its trend this week.

A decline in the EUR/USD below 1.19 is looming, despite the Euro hopes to overcome the pressures.

That is pushing the Euro down against the USD?

  1. Even after the European Medicines Agency’s permission to presume using the AstraZeneca vaccine in the European Union, it appears that the recovery in the Eurozone is still slow, in contrast to the fast track of the US economy.
  2. Central banks are unable to control rising yields. The Fed and the European Central Bank are still sticking to the accommodative tone and not raising interest rates until being sure that inflation has risen to 2%.
  3. German Chancellor Angela Merkel wants to extend the lockdown restrictions until April 18 with the return of high infection rates.
  4. France announced the extension of the lockdown to four new weeks in 16 regions (covering 40% of the country’s GDP).
  5. Many European countries are seeing an increase in the number of new infections, while the EU is suffering from a shortage of vaccine supplies.

EUR/USD fell to 1.1873 on Friday, ending the week near 1.1900, marking its worst weekly close for the year. The pair started the week down by 0.17% at 1.1897.

In the end, the dollar has all the reasons for climbing, while the euro is facing difficult pressures and challenges.

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