Since the big 2014 decline in the EUR/USD that took the pair from 1.39928 on the 8th of May down to 1.04617 by March 13, 2015 things have looked dicey for the pair. There was the rally back to highs in the 1.25 range by Feb 2018 but it has been a progressive downward slide since then.
Will the EUR/USD take out its January 2017 low. Well, it is headed in that direction. Not even the Corona virus made any difference.
The chaps at eFXdata think the price is going to 1.02, and possibly lower. They outline their analysis on why in their article, EUR/USD: Six Reasons To Be Bearish EUR/USD – BofA.
EUR/USD continues to lose ground and has fallen below the 1.08 level. What is the outlook for the pair in the coming months? Here is their view, courtesy of eFXdata: Bank of America Global Research discusses EUR/USD outlook and outlines 6 key reasons for staying structurally bearish on the pair over the coming months targeting a move towards 1.02. Read full post here …thumbnail courtesy of efxdata.com
Note how EUR/USD rally of 2017 started during the Trump Transition after winning the election, and then ended with highs during early February 2018. So what happened in February 2018?
Attorney General William Barr appointed U.S. Attorney John Durham to investigate the origins of the FBI investigation, “Crossfire Hurricane”. That is, to get to the bottom of the Russia Hoax. Durham’s reputation speaks for itself. He was assigned by Special Prosecutor by Janet Reno in the Whitey Bulger Case. Eric Holder assigned Durham to investigate the waterboarding of detainees post 9/11.
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Meaning, the unchecked fun and games anti-Trump forces were engaging in with impunity are now going to stop. And indeed, in short order the investigation turned criminal so for active players in the Russia Hoax there is now a chance they may go to jail.
Serious stuff. Serious enough to change behavior, and it seems to have done so.
Since Durham’s appointment the EUR/USD has steadily come off that high and slid ever downwards. This would seem to be a grudging acknowledgement of the two core realities of the two entities.
For the EU, it is the structural reality that it is not a democratic entity and is run top down by a cadre of elites who rule by dictate over their member states, and respond to almost every challenge by passing ever more restrictive laws, raising taxes, and printing money. This is negative to economic growth and prosperity.
For the US, it is the reality that Trump is a force for US economic prosperity. This is shown by the actions he took from before taking Office. His administration rolled back regulation, made a big tax cut, extricated the US from restrictive external treaties, created tax incentives like Opportunity Zones, and more. This is positive to economic prosperity. The Corona virus created an epic whipsaw in price however the long-term trend remains steadily down.
There are still questions, like how well the opening up of the US economy goes that may have an influence if it doesn’t go well. However, the fates of the EU and US seem pretty well baked into their respective structures and are likely to play out accordingly.
Will the Eurozone become a safe haven for capital in a monetary crisis? Not likely.
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