The Euro remained almost unchanged at $1.1768 on Monday. Even though it rose from a low of $1.1741 touched earlier in the session, the Euro is still more than a cent below Friday’s two-year high of $1.1908.
The common currency hit a speed bump on some technical signs of being overbought in the near-term – stated Minori Uchida, the chief currency analyst at MUFG Bank.
European Union leaders granted a 750 billion euro economic recovery fund last month. After that, sentiment on the Euro has improved significantly. Zach Pandl, from Goldman Sachs, stated that the deal could shift traders’ attention to the Euro at the expense of the greenback.
That sounds possible, considering investors’ rising worries about the U.S. outlook. Policymakers have struggled to construct a new deal to sink more money into the U.S. economy. An expanded unemployment benefit expired on Friday. It was worth about $75 billion per month, accounting for almost 5% of personal income. Without that aid, the businesses will be hard-pressed to weather the crisis.
How is the dollar faring now?
The U.S. dollar managed to rebound for a short time during the last week. However, it tumbled down on Monday, losing some gains. The dollar traded at 105.90 yen, dropping from an early high of 106.44. Traders worry about the U.S. economy’s slowing recovery and negative sentiment impacted on the currency.
Minori Uchida thinks that the greenback’s decline will probably continue further. Real U.S. interest rates are plummeting down even as the country is running a big current account deficit.
White House Chief of Staff Mark Meadows stated on Sunday that he was not optimistic about reaching an agreement on a new deal soon.
Thus far, the U.S. market has not shown a fast reaction to the downgrade, but the contrast with the European Union is still apparent. The European market has already managed to upgrade its rating outlook from stable to positive.