The EUR/USD currency pair is the world’s most traded asset, partly because Oil and Gold prices are always recorded in U.S. Dollars, even on online trading platforms. The EUR/USD is a cornerstone of international trading, and whether it rises or falls, smart traders can usually turn its movement to their advantage.
Until very recently, shopping trips to the United States were very popular for affluent consumers from Europe, Asia, the Middle East, and beyond. Buying laptops, smartphones and other electronic items was widely seen as a clever way to save money. However, due to the rise of populism in the U.S. and Europe, times appear to have changed.
Since President Trump took office, the Euro has fallen significantly against the U.S. Dollar, while on the other side of the Atlantic, nationalist parties are also gaining in popularity. Many of these movements are intent on dismantling both the Eurozone and the European Union itself. Many speculate the growing popularity of these nationalist movements is damaging the value of the Euro even further, all while investors lose confidence in the long-term prospects of the troubled bloc.
Some financial experts are even expecting to see a rare occurrence later this year: parity. This is when 1 Euro is worth exactly 1 U.S. Dollar. Lloyd Blankfein, the chairman of Goldman Sachs, has gone further, predicting an exchange rate of 1 USD to 0.80 EUR within the next twelve months. However, the Euro could still turn around. The European Central Bank has convinced the EU’s wealthiest member states to pay an additional 50 billion Euros in annual budget contributions, to make up for the shortfall Brexit will eventually cause.
Back in the U.S., President Trump has announced an infrastructure spending plan costing over $500 billion. With his strongest support coming from America’s industrial heartland. President Trump is also expected to follow through on his promise of bringing down the value of the U.S. Dollar, to stimulate exports.
If USD-EUR parity does occur, it might well be a short-lived phenomenon. U.S. exports could suffer from President Trump’s plans to terminate or renegotiate international trade agreements, compounding the already huge U.S. trade deficit. Coupled with a rising budget shortfall and high inflation, traders’ confidence in the U.S. economy could prove fragile in the months ahead.
In the current period of intense volatility, traders around the world are seizing the opportunity to speculate on the USD/EUR pair using online trading platforms such as UFX.COM.