By: Ahura ChalkiMarket analyst – IFC Markets
Thanks to vaccination programs in the U.S. and recent lockdowns and weakness in the vaccination process in E.U., earlier today, USD touched its four-month high against EUR. USD index currently trading at 92.70, in an unambiguous uptrend by a 0.18% gain so far, seems it is still broadly stronger after a one-week uptrend rally.
Meanwhile, despite the European efforts against new waves of COVID-19, it could not help E.Z.'s economy, and it looks weaker than its other competitors. Even Germany's retreat strict lockdown failed to restore confidence in the economic outlook of the block.
Earlier today, Tapas Strickland, the director of National Australian Bank, said, "The weak point in Europe remains around the vaccine rollout amid the rise in new virus cases and the tightening of restrictions ... which likely means the mooted acceleration in Q2 may have to be pushed back by a quarter... the narrative of the U.S. outperforming Europe in the coming quarter remains," (Reuters)
After a massive mess in European coordination of actions against the Coronavirus, Wednesday's better-than-expected economic data, including German Manufacturing Purchasing Managers' Index (PMI) and the European Manufacturing and Service PMIs, could not lift investor sentiment.
Yesterday, U.S. Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell reiterated their testimony in congress for Sena. They seem still confident in U.S. economic recovery and still playing down the worries about rising Yields and inflation. However, it is still a primary concern for investors. On top of that, we need to think twice about tax fate, as democrats have control over both House and Sena, especially after that Mrs. Yellen repeated that for the second time this week.
Higher tax and continuing the concerns about inflation in the longer-term will help the USD to keep rising.
Risk Warning: Trading-Leveraged Products such as Forex and Derivatives may not be suitable for all investors as they carry a high degree of risk to your capital. Please ensure that you fully understand the risks involved, considering your investment objectives and level of experience, before trading, and if necessary, seek independent advice.