Kit Juckes, Global Currency Strategist General Companyunderlines the importance of the terms of trade for the strength of the dollar. Euro Won’t Rebound Until Devastating Terms of Trade Divergence Stops.
Energy prices help the dollar and crush the euro
“When oil prices rose in the run-up to the Global Financial Crisis, both the European and US terms of trade suffered, but this time, the relative effect is completely different. From the US point of view. , this highlights the positive impact on the dollar of rising energy prices; for the euro, it only highlights the scale of the challenge facing the continent.”
“We don’t see a significant rebound for any European currency until we get past the gas crisis“.
“Our current forecasts point to EUR/USD will bottom in the third quarter, in a range of 0.95-1.00and although that level may be more or less correct, it is more difficult now to see a rebound before the end of the year.”
Source: Fx Street
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