Vasilis Tsaprounis
Independent Analyst
The single European currency is trading just above 1.14 at the start of the new week, maintaining a mildly positive tone in the wake of a tumultuous week where President Trump's '' tariffs dance '' monopolized investor interest.
President Trump has fully confirmed his reputation as a controversial figure with decisions that often cause significant controversy.
His extremely aggressive policy on trade tariffs has caused significant concern in international capital markets. International stock markets have experienced days of tremendous volatility, while at the same time US government debt securities have found themselves in the ''corner'', which has also negatively affected the US dollar.
As several key trading partners appear to be willing to begin a round of negotiations in order to find a balance on the issue of trade tariffs, on the other hand, the trade war between the US and China shows no signs of de-escalating and many are concerned about how much this will affect the United States' debt, since as is known, China holds a large percentage of it.
Apart from the fact that President Trump's policies have reduced America's credibility, creating concern among investors and holders of US bonds, I see no other significant reason for the explosive rally of the European currency.
Beyond the developments in the trade war, Ukrainian front remain high on the agenda, where unfortunately, despite initial optimism, the road to peace still remains thorny.
High on investors agenda is expected to come very soon and the policies of the two main central banks as the developments of the last 2 weeks are likely to shift the bets, but in any case the interest rate differential in favor of the US dollar will be very difficult to change too much within the year.
The European economy remains troubled, the likelihood of a recession is likely to increase, and apart from the doubts that President Trump has raised regarding the US debt, there are no other significant reasons that could support a continued rally for the euro.
I will remain in favor of the thoughts that soon will be some correction and the exchange rate will return to lower levels and for this reason I will maintain a position in favor of the American currency.
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