The EURUSD currency pair was trading at 1.0260 when writing this article, as many analysts predicted the pair would break back below parity with the US dollar, that is, to fall below 1.00. However, the pair was holding on to the 260 pips that prevented it from sliding below parity.
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Still, the question on most analysts’ and investors’ minds was, how long can the euro trade above parity with the dollar? Based on economic policies, the dollar should be much stronger than the euro, but recent price action suggests that most traders are tired of the dollar’s dominance.
The EURUSD price rally that started earlier this month has seen the company rise from a low of 0.9741 on November 4, 2022, to its current high above 1.0260, representing an over 500 pip rally. However, the pair has since pulled back as the dollar’s overbought conditions weakened.
The euro attempted to rally higher today following the release of the eurozone’s current account balance, which came in at -€8.1 billion, beating analysts’ estimates of -€20.3 billion and the previous figure of -€26.9 billion.
However, the currency pair’s price dynamics are currently being driven by investor expectations of lower interest rate hikes from the US Federal Reserve, which favour the single currency and higher interest rate hikes from the European Central Bank, which is far behind the record-high inflation.
Earlier today, the Spanish Economy Minister said that inflation in the country would remain at 7% till the end of the year, which is much lower than the overall estimate for the eurozone, which hit a record high of 10.7% in October driven by high energy, food and alcohol prices.
Overall, there were very few economic releases from the eurozone today, with many looking forward to tomorrow’s flash manufacturing and services PMIs from across the eurozone, combined with the latest FOMC meeting minutes.
*This is not investment advice.
EURUSD price chart.
The EURUSD currency pair was trading up 19 pips (0.18%) as the euro lingered above parity with the US dollar.
