The US dollar and the euro came in different weight categories by the end of this week. The greenback remains stable and is ready to grow further, while the euro slowed down.
On Thursday, February 18, the US dollar remains calm, showing relative stability. According to experts, the reason for this confidence lies in the strong statistics from the United States. Positive macro statistics give hope for the early recovery of the US economy after COVID-19 compared to other countries.
According to current reports, in January 2021, the volume of retail sales in the US increased by 5.3% compared to December 2020. To a large extent, this was facilitated by incentive payments from the US authorities. This indicator increased fourfold, exceeding the previous forecast of 1.2%. Meanwhile, the US producer price index in the first month of 2021 increased by 1.3% on a monthly basis and by 1.7% on an annual basis.
The current situation inspired the greenback, which tried to spread its wings after a long decline. According to analysts, the current strengthening of the USD is an indicator of growing investor interest in it and a positive attitude towards the recovery of consumer demand in the US.
Recall that the rise of the US dollar began on Tuesday, February 16, when the yield on 10-year US government bonds reached a new annual maximum. Securities rose 1.333% from 1.200% recorded at the end of last week. Experts drew attention to the gap between the ten-year and two-year US government bond yields, which increased to a maximum in three years. According to experts, this testifies to the positive sentiment of investors, who expect the Fed to keep interest rates at the current level. On Wednesday, February 17, the Federal Reserve released the minutes of its January meeting, which informs about the continuation of the existing economic course and the preservation of soft monetary policy.
For the euro, the current state of affairs was not very favorable. It went on a notable decline on Wednesday. However, by Thursday, the euro managed to regain some of the losses and added 0.08%, reaching 1.2045. Currently, the EUR/USD pair has climbed to 1.2068, heading for new records
Analysts expect the euro to rise in the event of positive data on the consumer confidence index for February 2021. However, despite the impressive ZEW reports showing the growth of economic sentiment in the eurozone (to 71.2 points in February from the previous 61.8 points), the euro was unable to break out of the downward trend. Investors are also worried about the forthcoming business reports, which are expected to be released on Friday, February 19.
The situation is more favorable for the US dollar. Investors expect further economic recovery after the adoption of a new stimulus package worth $1.9 trillion. According to experts, this lays the foundation for the potential growth of the USD "on a periodic basis". The immediate prospects of the US economy are in the focus of attention of market participants. The key place in this issue is given to the potential increase in inflation in the country. Many analysts are positive about the $1.9 trillion additional economic stimulus that will be injected into the US economy.
