EUR/USD Surges Nearly 4% in June, Outperforming Bitcoin’s Gains
The EUR/USD currency pair has recently shown significant performance, with a nearly 4% rise in June, surpassing bitcoin's 2.4% gain. Both assets are up over 13% year-to-date.
Key points include:
- Market analysts suggest further gains for EUR/USD could be possible, with resistance expected around 1.22/1.23.
- Germany's fiscal plan includes a €500 billion infrastructure fund and allows state governments to run deficits of up to 0.35% of GDP.
- This shift may redirect investment focus from U.S. assets to European equities, particularly as Germany increases defense and infrastructure spending.
- The U.S.-German yield differential is no longer a strong indicator for exchange rates, as higher U.S. yields are now primarily to fund deficits.
- Expectations of Federal Reserve rate cuts may favor the euro, while the ECB appears near the end of its rate-cutting cycle.
- European investors are increasing their FX hedging ratios due to the weakening dollar, which could lead to further upward pressure on the euro.
Overall, macroeconomic trends indicate that EUR/USD may remain strong despite challenges in the Eurozone, as hedging dynamics and potential U.S. Fed easing create bearish momentum for the dollar.