USD strengthens, EUR falls to over two-year low

17 часов назад

The dollar index continued its strong run, benefiting from rising interest rates in the US and falling rates in other major economies. As expectations grow that Donald Trump will win the November 5th election, investors are betting that his policies will keep interest rates high, supporting the dollar. Its planned tariffs and tax policies, in particular, have led to expectations that the US economy will benefit in the long run, further boosting demand for the dollar.

Rising real interest rates in the United States have clearly been a key driver of dollar strength, while rapidly falling rates in Germany and elsewhere have also widened the yield gap. So far, the gap between US and German 10-year yields has widened to 189 basis points. As a result, the euro is down more than 3% in the past three weeks and below its 200-day moving average, with the currency now trading near a two-and-a-half-year low against the dollar.

Analysts noted that the US interest rate advantage is dominating the foreign exchange market, and the dollar strength is expected to continue in the short term. However, the weak performance of the euro area economy is also one of the key factors in this trend. Weak economic data across Europe and the potential market impact of SAP earnings due this week continue to make the future of the euro less promising.

Earnings from Europe's heavyweight software maker SAP are expected to set the tone for the market, and while SAP's shares have risen 53% this year, its weight in Germany's DAX index and market sensitivity give it key clout. Especially in the context of global stock markets gyrating on reports from big U.S. banks and chipmakers, SAP's performance will influence overall European market sentiment.