Optimism in Eurozone gives euro a boost

After dormant weeks, the euro/dollar exchange rate is moving again. The euro was worth $29 on Thursday morning, June 1,1412, from $1,1360 a day earlier. For weeks, the euro has been rubbing against a resistance of $1,12, but that line now appears to have been broken.

The reason for the strengthening euro is due to several factors. The economy in Europe is visibly improving, while the rise of right-wing populism in European politics did not dominate the election results in the Netherlands and France. Germany will go to the polls in September. However, the polls predict another victory for Angela Merkel's CDU. This expectation reduces political unrest in Europe.

US optimism spills over to Europe
The euro is also supported by President Trump's mop policy. At the beginning of this year, analysts still had high hopes for Trump, but they are fading. According to Bloomberg news agency, that optimism has shifted to Europe. According to Bloomberg, 2017 could well be the year of the euro.

Last Tuesday, ECB President Draghi said the bank could adjust its support policy in the Eurozone, if the economic situation allows. Draghi did this to dampen the value of the euro. However, the market interpreted the statement differently, as the euro appreciated on Wednesday.

The evolution of the euro/dollar exchange rate this week. On Monday, the euro was still trading at $1,1190. On Wednesday, the euro had risen to $1,1360. 

Many banks, economists and analysts expect an easing of the ECB's monetary policy next year. They base their expectations on the improving economy and political stability in the Eurozone. Therefore, according to experts, it is likely that the value of the euro could strengthen further this year. A recovering euro is of course less favorable for (agricultural) exporters.    

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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