USD/EUR at nearly 20 year highs!

USD/EUR Currency Update

USD/EUR rose 1% to the best levels since December 2002 as the eurozone economy is at risk of a recession.

What has caused this rate spike?

The Euro has weakened on the back of fears that the energy crunch created by the Russia-Ukraine war and plans for the monetary tightening by the European Central Bank in response to inflation could send the eurozone into recession.

There is also a marked difference in how the FED is tackling rising inflation compared with the ECB. The FED has managed to aggressively increase interest rates lately, while its European counterpart has had to be more passive as it remains wary of the real dangers of slowing the economy.

The ECB is caught between a rock and a hard place as it needs to raise interest rates to tackle inflation and boost its currency while simultaneously supporting struggling economies which are just recovering after 2 years of pandemic-related issues.

What to bear in mind:

As you can see from the chart, over the last 20 years, we have only reached the current levels on a couple of occasions between 2014-2016. Every time the market has failed to move higher during that period before rebounding sharply.

The Russia/Ukraine conflict continues to support the US Dollar. Once we see an end to the war, we could also see an end to dollar support.

What are my options?

Buy your Euros in advance. We can hold your money on account free of charge or transfer your Euros to your local bank account.

Fix the rate for a future date with a 10% deposit.

Spartan FX can monitor the rate for you until you have the funds available.

Speak to Spartan FX to find out your options and how you can take advantage of these recent rate spikes

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Article by Spartan FX - Official Currency Partner to KipperTree.