What do you think the value of the US Dollar may rise against the Euro ahead of NFP and PMI printings? It is an interesting question because even so, if the Euro continues to decline, it can still benefit US investors in the long run. The NFP and PMI (National Fitch and Standard & Poor’s) ratings agencies are predicting large economic weakness around the world.
However, the Euro and other major currencies are weakening. So, what are the causes for the decline? There are plenty of explanations, but one of the reasons could be the flow of money out of emerging markets.
Most global financial analysts do not think the US Dollar will continue to rise against the Euro. There is a reason why the USD index has lost value over the past year. While we have all seen the Dollar steadily rising in recent months, there is little doubt that this is a bubble that is about to burst.
The Euro recently reached a historic low against the Dollar. This event was very important for China, Russia, India, Brazil, and Mexico. These countries were able to print money because they did not have a cheap way to get the currency needed to support their businesses.
Therefore, the Euro became a strong currency because it is very hard to get and a good place to store cash. Now, the Euro has been forced down by the recent spike in oil prices. Oil is always a very expensive commodity, so everyone in the world was able to benefit from this spike.
The Euro lost almost half of its value within just two months. This is not good news for any country that wants to use the Euro as a reserve currency. When these countries lower their level of spending, the Euro will become more expensive and eventually become a thing of the past.
As the Euro becomes less valuable, Americans will continue to own more Euros than US Dollars. However, this does not mean that the US Dollar will become more popular. If the Euro continues to weaken and rises against the US Dollar, then the US Dollar will likely continue to lose value.
Another event that is causing a large decline in the Euro is the Ebola crisis. When the Ebola virus surfaced in Africa, many countries had to immediately stop their businesses from trading with other countries. But, the Euro was unaffected.
The Euro continued to gain strength. Not only did the Euro rise against the US Dollar, but many European companies began to buy US stocks. The stock market had not been affected by the Ebola virus for several months.
The dollar declined greatly because many people feared that Ebola was spreading all over the world. Many small traders panicked and sold off their stocks. They stopped buying, which meant the dollar lost value.
The Euro continued to rise and the dollar plummeted. This event occurred due to a fundamental economic trend. If a country suffers because of an outbreak, there is a very high chance that the currency will collapse.
The Euro has not suffered, but may lose some of its value. At this point, the situation is still very volatile. You can profit from this situation and continue to buy Euros to hold onto until the inflationary cycle ends.