EUR/USD May Capitulate as Coronavirus Poisons Euro Outlook

If you’re a market watcher, you must be watching the EUR/USD very closely indeed. The EUR/USD has been showing signs of weakness and caution over the past two days.

While the dollar is hitting all time highs, all the other major currencies are in the doldrums or are near them. And it looks like they’ll continue to weaken as well. It’s not hard to see why there is caution, even panic as this positive performance is mirrored on the dollar versus all the other major currencies around the world.

The question now is “Will the USD rebound or will it fall further as the Fed decides to raise rates?” Because the US Dollar index is slowly breaking out of the red and is moving lower, which is a positive sign for investors and market watchers alike.

What really concerns me though is what is causing the reversal in the EUR/USD. So far, no one can find a reason as to why.

The euro continues to weaken with dollar strength as the dollar keeps showing strength. Will the Dollar always pull out the victory?

I don’t know that anyone can predict with any certainty what’s going to happen in the market just because so many people are affected by the Fed, the health of the greenback, economic fundamentals, and much more. But if you’re watching the EUR/USD, you know that there is nothing predictable about this move as I write this.

If you’re following the EUR/USD, you know that it may capitulate as coronavirus spreads its evil tentacles across the market, while Fed decision-makers try to hold their ground. Sooner than you think, the EUR/USD may retreat some more, then recover, and start the move up again, just like the years before, or maybe even sooner.

Perhaps the most important element to watch is the rate of growth of the greenback. While that’s a positive development, as it was a major cause for concern, if the greenback stays strong, then it will bode well for markets around the world as well.

If the US dollar strengthens more, that would be good news for the entire world. And so this should be a positive news story in the global market.

But even if the dollar strengthens or even falls slightly, then don’t expect the EUR/USD to immediately reverse direction, as that would be a mistake. Let’s face it: It takes a while for economies to catch up and stabilize, and if things begin to get back to normal sooner than expected, then you’ve got to be kidding.

They’ve been hitting the bulls and taking care of them. But Bretton Woods collapsed as soon as Bretton Woods collapsed, so we have to be careful.

One thing is for sure: Brettons Woods gave birth to Brettons Midas, as the Bretton Woods II plays out and results are measured, and the futures of Bretton Woods foretold the events that have transpired. If the Bretton Woods II falls into the wrong hands, who knows what’s going to happen.

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