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Euro Climbs Higher on USD Forex Market Weakness

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  • Highest Point of Year for Euro
  • Brexit Concerns Weigh on Pound
  • Markets Start the Weak Strong and Positive

Several factors working in tandem today and throughout the beginning of this week have managed to keep the Euro trading very strongly in the forex market. Chief among these factors is Dollar weakness as the currency continues in a confusing crossfire between inflation fear of an economic recovery, and improving strength from the Euro on the domestic front. Some confidence appears to have been restored in recent days that the Fed will continue their very supportive economic policies while at the same time markets on Wall Street have come roaring back even as a stock rotation continues.

January Peak Reached by Euro

The Euro traded at 4-month highs on the back of a weaker dollar but also a more positive sentiment in the Bloc. This feeling has been supported by German economic numbers where IFO Business Climate, and Business Expectation number both defied the expectations of analysts. The points to an uptick in sentiment in Europe’s largest economy despite a contraction of 1.8% in the first quarter.

This data clearly buoyed the common currency and those forex trading it while it traded at least momentarily above 1.225. Another key driver has been the Dollar which continues weaker on a feeling that the Fed will be able to continue for the time being with their loose economic approach. New home sales data in the US also shows a sharp fall of 5.9% amid rising prices with March figures also revised lower.

Pound Struggles With Brexit Friction

The Pound still trades at relative strength above 1.41 against the Dollar though this is for the most part due to weakness from the Greenback rather than any show of strength from Sterling. This is in contrast to the jump upward of the Euro today.

The key concern forex brokers feel for the GBP is centered on issues with the Northern Ireland Protocol and whether there should be a customs border in the Irish Sea. The UK insist there should not be one, but the European Commission President Ursula von der Leyen insists this would constitute a change to the signed agreement. The impasse rumbles on and has disrupted any recent momentum that the Pound managed to gather.

Strong Start to Week for Markets

Wall Street pushed back to start the week with more strength. The Dow Jones and NASDAQ both posting very healthy gains on Monday as Tuesday trading continues reasonably flat. Many of the so-called reopening stocks were significant beneficiaries with airlines and cruise operators both gaining on plans of a summer comeback.

There were gains across the board as multiple states now boast very high COVID-19 vaccination records with more than 70% in many states having received at least 1 shot. The case numbers also continue to trend lower in the US despite outbreaks in some other countries worldwide.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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