27 sep
2019
11:05
Markets
The dollar took off. Will it reach the euro?
Lately, the EUR/USD pair is being traded at 1.0919, which is the same indicator as two years ago. Experts are discussing the possibility that the currencies may reach parity.

The euro has been solid for the whole year. The EUR/USD pair was traded at about the same level. In the latest days, there has been a shift toward the indicators of 2017, but this is likely due not to the weakness of the euro but to the strengthening of the dollar.
 
Since last year, there has been a gradual descent of the euro, which is now trying to gain momentum. This is due to the issue by the US Department of the Treasury of treasury bonds for the amount of USD 125 billion and notes for the amount of USD 85 billion. The transfer of large capitals to the US market is strengthening the dollar. Moreover, already at the end of the summer, the Department of Treasury disclosed its plans to attract borrowings for USD 800 billion during the year.
 
There is a lack of dollar liquidity. Even a 33% increase of the limit for overnight operations by the New York Fed did not bring stability: the demand remained higher than the offer.
 
Other basic factors are in favor of the dollar: rates on European bonds are much lower than the American ones. The negative yield of many securities convinces investors to switch over to the dollar.
 
Experts discuss whether the EUR/USD pair will be able to exceed the level of May 2017 (1.0715) and reach a balance. Some say that this will certainly happen, while others are sure that the strengthening of the dollar is only temporary, and soon it will return to the usual situation.
 
Of course, Trump will not be happy with parity. But now, he is more worried about the Democrats calling for impeachment than about the situation on the currency market.