Euro enjoys strength following Dollar turmoil

Over the years many of our regular customers may have been made aware of the special relationship between the US Dollar and the Euro, and a trump Presidency is boosting demand for the single currency heavily. The USD/EUR currency pairing is the most heavily traded currency pairing in the world, given that these are the two most readily available currencies. As such, the general rule of thumb is that weakness in one currency generally translates into strength with the other.

Its best to think of the Euro or the Dollar as the largest net in the currency markets ready to catch investors fleeing from the other, and enjoying strength from increased demand. Trump’s volatile nature at the helm of the US has created a situation where most investors wish to be ‘first out of the door’.

Will GBP/EUR continue to fall?

As mentioned in the Dollar section of this report, in the short term we can expect further Dollar weakness as European and US financial markets are yet to open, and once they do similar results are anticipated with traders in this regions free to react to the news and begin to sell off Dollars in droves.

Due to the relationship mentioned above, we can therefore expect further Euro strength as the day progresses and for GBP/EUR to become a dearer prospect.

Following this, changes in the value of the Dollar (and therefore the value of the Euro) will be governed by Trump’s initial comments over the next few days. We are well aware that Republicans are expected to control Congress, so Trump has the ability to act on his words, and therefore markets will be hypersensitive to this news.

If you are in a position to, and have a Euro buying requirement, it may be wise to secure a rate of exchange using a forward contract and eliminate the risk open to your position with Trump easily able to rattle the financial world.

You can contact your account manager here to discuss the parameters of how to secure an exchange rate for up to 18 months and safeguard your transfer from any further adverse movements.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.