In the past three weeks, the single currency has clearly appreciated against the US currency, because of the stimulus intentions announced by the European Union, but also due to the social instability that is experienced in the USA. After a downward trend that started after the medium-term highs reached in early 2018, the main currency pair went from $1.255 to $1.0635 at the end of March this year. At the technical level, there is a trend line between $1.14 and $1,145, with an upward breach making room for considerable appreciation, even testing the $1.255.
On the other hand, a rejection of that break would give a pessimistic signal, with the possibility of a test of the lower trend line that is now at $1.05, and if it were broken down very likely we would have a parity test, something that it hasn’t happened for eighteen years. From a fundamental point of view, the analysis tends to be in favour of the US Dollar, given that the largest economy in the world should behave relatively better than the European Union, however it is necessary to bear in mind that in November there are elections for the US presidency, which may put some pressure on the US currency, before or after the election. Rather, by Trump’s provocative political moves to win the support of his “tougher” constituency, while after the election the Dollar’s weakness may come from the measures Trump wants to take against China if he is re-elected.
