Euro Poised to Reach 1.20 with Fed Decision, First Since 2021

In the financial arena, the Euro is poised to breach the 1.20 level against the US dollar, especially with the upcoming Federal Reserve decision on Wednesday. The Federal Open Market Committee (FOMC) is unlikely to announce a rate cut or suggest imminent changes, but any indication of a dovish inflation outlook could weaken the dollar.

Current Economic Climate

This potential shift has significant implications for the Euro, which is approaching its highest value since 2021. Although the last decade has been challenging for the European currency, recent developments suggest a turnaround. Policymakers in Europe have adopted a more pragmatic fiscal strategy, including increased spending in Germany to combat a slowdown in manufacturing.

Investment Trends in Europe

• European investments are viewed as more stable compared to those in the US.
• In the past year, European equities have outperformed US stocks, particularly the Nasdaq.
• The economic forecast indicates a growing interest in European markets due to higher valuations in the US.

Interestingly, the recent rise in the Euro is attributed more to the weakening dollar than to inherent strength within the Eurozone. The US dollar has faced significant depreciation against several currencies, including the Japanese yen and the Australian dollar. Comparatively, the Euro stands as a middle performer despite these fluctuations.

Technical Analysis of EUR/USD

If the Euro surpasses the 1.20 threshold, some significant resistance levels lie ahead. The early 2021 high of 1.2225 and the 2018 peak of 1.2475 could become attainable targets, particularly if the Federal Reserve announces any rate cuts.

Looking ahead, the economic landscape favors continued discussions about the Euro’s growth. Investors should remain attentive to Federal Reserve updates and any economic shifts that may arise. The commitment to pragmatism and deregulation in Europe can further bolster the Euro’s position.