The euro continues to strengthen against the dollar, approaching its longest period of growth in the last twenty years. On Tuesday, the European currency reached $1.1829, which is 14% higher than at the beginning of the year.
If the trend continues, this will be the ninth consecutive day of growth — the longest period since 2004. Analysts note an increase in positive sentiment in the market. Risk reversal indicators, which reflect the expectations of market participants, show the third strongest shift in favour of growth for the current year.
According to depository systems, about two-thirds of option contracts over the past week are focused on further strengthening of the euro.
Experts predict that the euro could reach $1.20 in the coming months. Representatives of the European Central Bank (ECB) have stated that moderate currency appreciation is not a cause for concern, but more sharp fluctuations could complicate the achievement of economic goals.
The rise of the euro is largely due to the weakening of the dollar amid expectations of monetary policy easing by the US Federal Reserve. According to market estimates, by the end of the year, the US regulator may cut rates by 125 basis points, while the ECB is maintaining a more cautious approach.
This week, investors are focused on the release of key US macroeconomic data, including the employment report. Inflation indicators in the eurozone continue to show mixed dynamics, confirming the ECB’s forecasts of a gradual return to the target of 2%. At the same time, some analysts attribute the current strength of the euro to the improvement in the global economic situation and the reduction in geopolitical risks.
