Euro hits 4-year high against the dollar: New target on the market agenda

The European currency, the euro, tested a four-year high of 1.1829 against the US dollar yesterday before retreating slightly to around 1.1767. It is emphasized that the expected non-farm payroll figures from the US will be particularly influential in this rise of the exchange rate.

ING strategist Francesco Pesole stated that if the American employment data to be released in the coming days fails to meet expectations, the euro/dollar parity could gain momentum toward the 1.20 level, which is considered critical from both psychological and technical perspectives. Pesole said, “The movement of the euro against the dollar is essentially determined by the performance of the dollar. Weakness in US employment could suppress the dollar and lead to a strengthening of the euro.”

Meanwhile, European Central Bank (ECB) officials are also closely monitoring this rise. In his statement, ECB Vice President Luis de Guindos expressed that the current levels are not concerning, while noting that the parity exceeding 1.20 could create complex consequences. Other figures in the ECB administration, such as Gediminas Simkus and Martins Kazaks, had previously emphasized the economic risks associated with a strong euro.

Francesco Pesole stated that the euro approaching 1.20 dollars is also a critical threshold in terms of whether the ECB will provide more visible reactions regarding monetary policy.

All eyes are now on the non-farm payroll data coming from the US. It is stated that if the results fall below expectations, a new wave of rise could be experienced in the euro, and market actors will carefully watch for possible steps by the ECB.

News Source: 12punto