FxWirePro: Further dollar rally will get euro fuel

What has been fuelling the dollar so far, especially against the euro?

US President Donald Trump’s policy proposals, which include increased infrastructure spending, new tax proposals, and new bilateral trade deals that could reduce the trade deficits of the US. In addition to that, monetary policy divergence has also been positive for the United States. In 2017, the US Federal Reserve has promised to hike rates by three times of 25 basis points each, whereas the European Central bank (ECB) is set to buy €780 billion worth of assets.

But the biggest push is yet to come.

Last year we at FxWirePro, forecasted for it to come and to some extent, it has come and that is the pricing of political uncertainties across the continent. The possibility of a further breakup of the European Union, as well as, the complete shattering of the Eurozone is not an impossible reality anymore.

French National Front leader Marine Le Pen has promised to break away from the Eurozone but even if she fails to win, the anger of the people hurt by globalization, relentless austerity, and uncontrolled immigration will not simply disappear in a matter of months or years. After a long pause, the suffered people have woke up all across the globe as well as in the European continent.

The single currency can’t escape the consequence and that is good news for the dollar bulls. The euro is currently trading at 1.063 against the dollar and we expect it to drop below parity.