Euro/US dollar rally unlikely to persist

SINCE the pair peaked in 2018, the euro has been on a steady decline against the back of a strengthening US dollar until late May of 2020 when a strong reversal was staged.

By contrasting the move against the US dollar index, a mirror image may be observed in the same period that showcased the rally from 88.13 to the top of 103.03. Within a span of the following nine months, the euro/US dollar pair was able to return 86 per cent of the gains that was lost in the downturn.

In March this year, a slight correction of 5 per cent occurred but prices quickly snapped back to the top where it is at present. Despite the rapid recovery, various indications point to the possibility of the euro/US dollar undergoing a mean reversion in the near to middle term.