Since spring 2015 the EUR/USD currency pair has had a period of relative calm. During the trading session earlier today, it rocketed to a high of 1.1575. However, the European currency faces renewed scrutiny as it remains above the 1.12 level, prompting some investors to express mild doubts about its resilience. The dollar’s strength is finding it difficult to find its feet after a near-term high correction. That’s a tricky new landscape for currency traders to navigate.
As of late, the common European currency has traded in a very narrow range. Yet it has held steady despite the growingly nervous stance investors are taking on. This consistency follows the well-publicized instability the previous week when the EUR/USD hovered around 1.1065. It has provided some support for prices, with analysts pointing to a weak upward trend at the beginning of this week. That investor caution has greatly suppressed betting volume in the market, raising doubts about how long that stability can last.
Those market dynamics have been complicated even further by something of an unfortunate agenda for today’s economic data releases. Without clear parameters to inform their choices, investors will be forced to enter the market with more trepidation. Looking ahead to today’s market activities, it should be a rather faint agenda. That trend encompasses a larger hesitance in trading strategies, indicating a low-likelihood for a broad trading range.
At the same time, the US dollar has not received the boost one might expect from high yields. The 10-year bond yield is hanging near the 4.50 level, after a drop we saw yesterday. Bond yields are flat, which usually indicates danger for the US dollar. This weakness might largely keep it from taking full advantage of the positive impact of higher interest rates.
Public opinion on international trade and relations has changed as well. But recent days have seen a rapid drop in concerns over all-out trade war between the U.S. and China. Along with decreased uncertainty, this shift possibly produced a more favorable environment for currencies of nations more heavily involved in world trade. President Donald Trump’s policies continue to remain high on investors’ agendas, which could influence future market movements.
As traders grapple with these uncertainties, the strength or weakness of the common European currency is always a key question. At least, it has continued to outperform and stay above the key 1.12 role reversal level. Yet, skepticism persists about its future capacity to maintain this stance in the face of mounting outside pressure and unknowns within.