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EUR/USD Fundamental Update 18 Feb 17

Good day forex traders.

Welcome to our fundamental update of the EUR/USD. It is with this that we seek to obtain insights as to the currency pair’s developments.

Reuters reported that the German Chancellor Merkel suggested that the euro is too low for Germany. 

” German Chancellor Angela Merkel suggested on Saturday that the euro was too low for Germany but made clear that Berlin had no power to address this “problem” because monetary policy was set by the independent European Central Bank.

Merkel made her remarks at the Munich Security Conference as U.S. Vice President Mike Pence looked on. They seemed aimed at addressing recent criticism from a top trade adviser to President Donald Trump, who has accused Germany of profiting from a “grossly undervalued” euro.

“We have at the moment in the euro zone of course a problem with the value of the euro,” Merkel said in an unusual foray into foreign exchange rate policy.

“The ECB has a monetary policy that is not geared to Germany, rather it is tailored (to countries) from Portugal to Slovenia or Slovakia. If we still had the (German) D-Mark it would surely have a different value than the euro does at the moment. But this is an independent monetary policy over which I have no influence as German chancellor.”

The euro has fallen nearly 25 percent against the dollar over the past three years, touching a 14-year low of $1.034 in January. But it has since risen to roughly $1.061.”

This may be suggestive of upcoming euro strength as Germany is the union’s largest economy. An impact on the German economy will probably drag the monetary union as a whole and hence provisions may be made.

We need to continue monitoring the development and comments of influential politicians.

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