EURUSD volatility abound as more Americans buy houses whilst Europe lags behind
EURUSD volatility has been on the rise, reflecting contrasting trends between the United States and Europe, particularly in the housing market.
One of the key indicators of economic confidence and accessibility is the rate of new home sales. In the United States, the anticipation is high for the January 2024 new home sales figures, with expectations hovering around 680,000 compared to 664,000 in the same period last year. Despite recent interest rate hikes burdening mortgage holders and borrowers, the resilience of the US economy has remained evident, contributing to a strong US Dollar against other major currencies.
Examining the EURUSD pair reveals significant volatility. At 9.10 am UK time today, the pair was trading at 1.08347, marking a slight uptick for the Euro from its position on February 20. However, the Euro’s performance remains subdued compared to its levels at the end of last year.
The US Dollar’s recent rally against the Euro may be attributed to the decision by US central banking authorities to maintain interest rates at current levels. While anticipated rate cuts did not materialise, the assurance of stable interest rates has likely bolstered borrower confidence in the US housing market.
Conversely, Europe faces a more challenging economic landscape. Reports from the Bundesbank suggest a potential downturn in the German economy, raising concerns of a technical recession. This follows a lacklustre performance in 2023, where Germany’s economy struggled compared to other major economies.
Overall, the divergence in economic prospects between the US and Europe is evident. While the US economy appears resilient, with optimism prevailing despite previous challenges, Europe grapples with slower inflation reduction and the looming threat of recession in key economies like Germany.
While the Euro has made some recent gains against the US Dollar, today’s new home sales figures in the US, coupled with concerns surrounding the Eurozone, serve as a reminder of the ongoing economic uncertainties on both sides of the Atlantic.
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