Vasilis Tsaprounis
Independent Analyst
The single European currency is taking sharp losses having approached the threshold of the 1.07 level as the US dollar has caught fire finding significant support from the latest developments in the United States where Donald Trump looks to be the next president of the United States.
As he is very close to gathering the total number of electors necessary for the position of president, with him leading almost all of the critical states that determine the final winner, he already made the declarations of victory a while ago, calling himself the president of the United States.
From very early in the morning during the Asian zone and from the moment the first exit polls began to be announced the looming dominance of Donald Trump led to an impressive rally in the American currency with the euro retreating almost 200 points from the levels of 1.09 at 1.07.
Τhe increased volatility was something to be expected confirming yesterday's thoughts as several investors were trapped in positions in favor of the European currency at levels close to 1,09.
Τhe development of the presidential elections in United States is logical to remain high on the agenda and today even though the results are almost known.
Several analysts had estimated that in the event that Trump won the battle, the American currency would be favored, nevertheless, I maintain a more conservative thinking, considering that once the dust settles from the developments, the European currency will find the ability to react.
Risks from the Middle East front as well as bets on the prospects for further rate cuts from Fed and Ecb have temporarily taken a back seat but will very soon return high on the agenda, and the issue of interest rates in particular is what will determine largely the course of the exchange rate.
In the shadow of the American elections today's agenda does not present anything very special with the speech of president Christin Lagarde being the only thing that stands out, as the announcement about the factory orders in Germany little earlier although they surprised positively did not affect the exchange rate.
I remain on a wait-and-see attitude, maintaining doubts about the continuation of the rally of the US currency as I estimate that relatively soon the dust will settle and the European currency will find an opportunity to react.
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