The EUR/USD currency pair has been steadily climbing from its low on Monday, with economists at Scotiabank predicting that it will soon push above the 1.10 handle. This rise is being driven by a number of factors, including positive economic data and a weaker US dollar.
One of the main drivers behind the EUR/USD rise is positive economic data coming out of Europe. Recent data has shown that the eurozone’s manufacturing sector is expanding at its fastest rate in three years, while services activity is also on the rise. This has led to increased optimism about the economic recovery in the region, which in turn is boosting the euro.
At the same time, the US dollar has been weakening due to a combination of factors. One of the main drivers of this weakness is the Federal Reserve’s commitment to keeping interest rates low for the foreseeable future. This has made the US dollar less attractive to investors, who are seeking higher returns elsewhere.
What Could a Push Above 1.10 Mean for the Future?
If the EUR/USD currency pair does push above the 1.10 handle, it could have significant implications for the future. One potential consequence of this rise is increased volatility in the markets, as investors react to the changing value of the euro and the US dollar.
Another potential consequence of the EUR/USD rise is increased inflationary pressures in Europe. A stronger euro can make imports cheaper, which can in turn push up inflation. This could lead to increased pressure on the European Central Bank to raise interest rates, which could in turn have a knock-on effect on the wider economy.
However, there are also potential benefits to a stronger euro. A stronger euro can make European exports more expensive, which could help to rebalance the eurozone’s economy and reduce its reliance on exports. It could also make it easier for the ECB to achieve its inflation target of 2%, which has been elusive in recent years.
Conclusion
In conclusion, the EUR/USD currency pair is set to push above the 1.10 handle, according to economists at Scotiabank. This rise is being driven by positive economic data in Europe and a weaker US dollar. If the pair does push above 1.10, it could have significant implications for the future, including increased volatility in the markets and increased inflationary pressures in Europe. However, there are also potential benefits to a stronger euro, including a rebalancing of the eurozone’s economy and increased ease in achieving the ECB’s inflation target.
