closed last week above 99.0. This is the area of ​​highs of the last three years. After touching these levels in September-October last year, the US currency turned several times to decline. But it is likely that this time we will see further strengthening of the dollar index in the region of 100-103, which will mean a return to peak levels in 2016-2017. At that time, he spent a little longer than a quarter in the area of ​​13-year highs, but soon turned around to decline.

A similar story with the main currency market pair -. Falling below 1.0880, last week it returned to the levels of April 2017. From current levels, the next important milestones on the way to decline are the levels of 1.0730, 1.0500, 1.0340.

The first mark will close the gap in the pair, formed in connection with the elections in France, when the risks of the coming to power of the ultra-right Marine Le Pen disappeared. The second mark represents the last round psychological level before the parity of the dollar and the euro. The third is the minimum point of the pair in January 2017, when the euro slipped down at low volumes in the first days of the year.

A fall below 1.0340 will potentially return the pair to 2002 levels. These were the times when the ECB supported the first years of the existence of a single currency. Then the level of trust in her was low.

From the side of fundamental indicators, there are no special obstacles to reducing the single currency now. in the fourth quarter of 2019, growth slowed to 0.9% y / y, against quite healthy levels of 2.3% in the United States. A long list of data comparisons not in favor of the eurozone includes, the pace, extent of slowdown, growth.

A wide range of data suggests that the ECB needs to scale up its policy on a large scale so that it is consistent with the Fed's policy. All these are arguments in favor of further growth of the dollar. But there are also arguments against. It's about trump.

The US President has repeatedly and publicly spoken out in favor of easing monetary policy, thereby intending to weaken the dollar and thereby support exports. Judging by the available comments, the exchange rate issue was actively discussed at the US and Chinese trade negotiations, and now it can become one of the important cornerstones in the US and EU negotiations that Trump outlined for this year.

There were precedents in US history when they forced the whole world to support, or at least not interfere, the weakening of the dollar. These were the interventions of the central banks of Europe in the early 2000s and the Plaza Accord in the 1980s, not to mention the abandonment of the “gold standard” in the early 1970s, which also provoked a weakening dollar.

At the same time, history suggests that a weakening dollar over the years is benefiting the global economy, whose growth rate is increasing in response to the desire of markets to put dollars into business, rather than store them in US Treasury bills. So the US presidential administration may have arguments to convince Europe and the rest of the world of the need to stop the dollar strengthening when it seems that it has become excessive.

It is also likely that the promise to conclude “the right trade agreements” will be a major part of Trump’s election campaign.

FxPro Analyst Team