A few weeks ago I have mentioned that the fundamentals of the US dollar indicated that in the medium-long term the most important movement of the currency could be the appreciation, since the Fed’s position was clearly ahead of many other central banks, in the direction of normalization of monetary policy, and for example in relation to the ECB, the distance is even more evident, with the European bank still in a cruising phase of economic support, and there is not even a credible horizon for the end of the stimulus program, because the Inflation in Europe is substantially more contained, as well as the economic growth of the world’s largest economy is for now more robust than that of the European Union, that is, there are still fundamental reasons for the maintenance of monetary policy by the ECB.
On the other hand, the fiscal stimulus in the US, the investments to be made in the infrastructure package projected by Biden, as well as the FED’s balance sheet are higher than those of the EU and the ECB respectively, meaning that the liquidity injected into the system is by now superior on the other side of the Atlantic, so the strength of the US dollar against the Euro is not yet very evident, however since the last FED meeting there has been a clear shift in strength, and now it remains to be seen whether it is to continue or not, With this proof of nine in the possibility of EUR/USD breaking down a support line at $1,176, what follows could pave the way for a test of the pair.
