Forex: The Euro advances in the Eurozone. One of the relevant currencies in the Forex market, it goes back again after a limited quarter. Will it be a positive omen for investors?
After months where the world has been plagued by a pandemic, causing a decline in global economies, a bit of order between countries is finally beginning to show. And Europe is not the exception.
Since the end of May 2020, European countries have started with their plans for economic reopening and normalization of their internal operations. This normalization was intended to be scaled, but the collective factor hastened the course of things, spoiling the plans.
Analysts from the European Union bloc are betting that this economic reopening will be the key to recovery. Resulting in a rising Euro.
The Euro advances in the face of the pandemic
The European currency is at its strongest level for almost two years on the official trade weighted index of the European Central Bank, which compares it to the indices of other leading currencies.
As such, the advance of the euro should be viewed as a judgment on the relative strength of Europe compared to the United States and other parts of the world.
As the month of June started, it looked like a trend could start to take hold in EUR / USD. After spending most of the first two months in a limited state the Euro is advancing. For this reason, investors’ risk feelings were present.
Although the dollar has acted as a safe-haven currency for much of the coronavirus crisis, it has begun to suffer declines compared to currencies that tend to be more in demand during these risky periods.
Risk sentiment is this market environment where investors decide how to invest, depending on how risk is perceived in that period.
In this case, with the reopening of the Eurozone economies, and the investor-laden environment with a modest appetite for risky investments, they have decided to trust in some way to improve the figures of the European bloc’s currency, hoping one Euro on the rise.
Is the European currency becoming a more reliable option than the dollar?
The performance of the European bloc in maintaining relatively constant economic stability, and the measures taken against the coronavirus, position the Eurozone with an advantage compared to the United States.
The Euro is advancing thanks to the correct decisions made by European countries to stop COVID-19 compared to the USA.
Since, the American country has left a lot to be desired with its performance in the face of the health crisis. Causing an acceleration of infections, instead of stopping the pandemic.
In addition, this drop has increased as the United States government updates the figures. These figures are: materials manufacturing prices, and rates of increase in payroll for employees in private companies.
Although this last factor of the payroll of the employees, has not generated as much influence in the price of the dollar. When compared with the effects that the decisions of the American government on the control of the pandemic caused, it is clear where the true uncertainty of the investors emanates.
This has made movements in the foreign exchange market lack conviction, as doubts about a much-anticipated global economic recovery have increased given the resurgence of US cases of COVID-19, and the threat of new closures in the cities of the United States. USA considered critical points of local infection.
Euro quote to date
At the time of writing this article, the Euro rose 0.2% to 1.1256 EUR in the Forex market, after a rebound in which the euro gained 6% against the dollar in May and early June.
In summary, analysts expect July to be a positive month for the eurozone in the Forex market, as the Euro advances day by day, due to the progressive economic opening that the European bloc expects to do in the following month.
The information in this content has been extracted from reliable sources detailed below:
1- Own writing of the content author.
2- Part of the information recovered from the Reuters agency.