Monday 24 October 2016

Is parity between the dollar and euro seen on the horizon?

Euro/dollar on Friday successfully updated the minimum from eight months. On Thursday "bears" did not have quite a bit: the instrument stumbled on 1.0913 (the "bottom" stood at 1.0911), but on Friday the market has corrected this misunderstanding. Dollar rises in price everywhere, rapidly and confidently. The main trades in EUR/USD at the beginning of the week go around 1.0880, sellers goal shifted to 1.0821, a minimum of March 10 this year.
Nothing new has happened. Just in the background there was an empty macroeconomic calendar, investors continued to win back the results of the meeting of the European Central Bank, which took place on Thursday. The belief that Mario Draghi will soon (possibly this December) will announce the extension of the quantitative easing program, is growing with each passing hour. While in the ECB at the official level it is still not discussed, but also the time to make such a decision is enough.
Mitigating of European QE on the background of interest rate rises by the Federal Reserve System draws in the investors imagination very colorful pattern, where the euro is weak, falls on each sneezing, and the dollar is strengthening its market position. There, you see, speaks about parity become louder and louder.
However, it's not that simple. Perspectives outlined above are already in currency quotations, everything else is emotions and reactions. So in December will still be euro/dollar movements, perhaps with drops to 1,06-1,07, but the market quickly will play them back and will return in the medium range of 1,08-1,10.


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