An interesting and relevant aspect in the world of currencies is the recent weakening of the US dollar (USD) and the strengthening of the euro (EUR).
The Current Performance of Major Global Currencies
During the last week, we have observed a trend in which the US dollar has shown weakness, while the euro has gained ground.
US Dollar Index (DXY): The DXY, which measures the value of the dollar against a basket of six major currencies (including the euro, yen, British pound, etc.), has decreased approximately between 0.4% and 1.5% in the last week. This has led it to a low of more than a decade against some currencies, such as the Swiss franc.
Euro/Dollar Pair (EUR/USD): In contrast, the EUR/USD pair has gained value, rising around 0.1% to 1.8% in the last week, and currently trades around 1.17 USD per EUR. This movement means that more dollars are needed to buy one euro.
Interesting Factors Behind This Trend
Geopolitical Easing: The recent news of a ceasefire in the conflict between Israel and Iran has significantly influenced this. When there is less global uncertainty, investors tend to move away from assets considered 'safe havens' like the dollar, and seek opportunities in currencies more linked to economic growth, benefiting the euro.
Interest Rate Expectations:
Federal Reserve (U.S.) Stance: Although the Fed has been cautious, expectations that there could be interest rate cuts later in the year have weakened the dollar. Lower rates make holding a currency less attractive to investors.
European Central Bank (ECB) Stance: While the ECB has also been moderate, the prospects of an economic improvement in the Eurozone and a potentially lesser deterioration compared to the U.S. are giving a boost to the euro.
