When EUR/USD reached $1.04 in March 2015, the dominant noise in the main currency pair was about the approach of parity with the US currency. An idea that returned at the end of 2016 and more recently in March this year, in the middle of the COVID-19 pandemic, however in neither case did this equality of value happen and with the end of 2020 the main currency pair is now well far from that possibility and on the way to revisiting the highs reached in February 2018. But despite the strength shown in recent months, the fact is that the long-term trend has been downward, at least since the financial crisis that started in the USA in 2008.
But then why is the recent strength of the single currency due? it will be a consequence of a closer approximation of the member states in terms of aid to the states most affected by the crisis resulting from the COVID pandemic or just a relative force because of the exorbitant injection of money into the system by the EDF, which largely supplanted those decided by the ECB, which ended up weakening, at least in the short to medium term, the greenback? Whatever the reason, the reality is that the strength of the single currency turns out to be counterproductive to the European bloc’s aspirations to recover from the economic crisis, given that the export sector is at a disadvantage compared to US companies.
From a technical point of view, the prospects are slightly positive in the short term, since the March lows were higher than the previous ones, but on the other hand and after an appreciation of more than 15% the EUR/USD is now approaching a resistance that is the bottom line of a long-term ascending channel, formed between 2009 and 2011, with an attempt to break up that line in early 2018, which failed, setting the tone for the fall in the pair of coins from $1.25 to $1.06.