In doing so, it even fell below the parity limit and much below the value of the US dollar. From November, the European currency was able to slowly recover and once again rose above the US dollar. Nevertheless, the euro is currently still a long way from its old strength. However, this could have some positive effects on the German economy. And also on the forex market, the currency pair currently offers an exciting investment opportunity. Let’s take a closer look at the topic!
Where is the strong euro?
The euro is currently at a value of 1.06 US dollars (as of March 3, 2023). The euro has thus overtaken the US dollar again since November 2022, albeit much more closely than was usual in previous years. In 2021 it was not uncommon to get around 1.22 US dollars for one euro. There are of course many reasons for the weakening of the euro at the moment if you take a look at the economic and political situation in Europe. At the same time, however, experts are certain that the exchange rate fluctuations are not just a matter of a “weak euro” but also of a “strong US dollar”. The rollercoaster ride of the price could also have something to do with the rapid recovery of the US economy. The country’s economic performance was able to return to pre-crisis levels as early as the second quarter of 2021, thereby avoiding long-term damage. In addition, the Fed reacted much faster to the rapidly rising inflation than the ECB. Concerns about an oil shortage and the associated inflation are also not so important in the USA, since the country operates many fracking projects on its own soil. Today, the euro is slowly strengthening again, but experts are not yet confident that it will stabilize.
Can Forex and the German economy benefit?
However, the weakened euro does not only have disadvantages. The developments on the foreign exchange market in particular have been followed with great interest. At the Forex Handel is bet on the price fluctuations of various fiat currencies. It is important to buy and sell the respective currency at the right time. The currency pair EUR vs. USD is considered one of the majors and is therefore combined particularly often. The wide swings have enabled investors to make huge profits on the currency pair – provided they are correctly judged.
The German economy can also benefit from the weak euro. Currency fluctuations have made the country much more attractive for export trade, because buyers outside the euro zone can now buy cheaper here again. Since Germany has a large number of companies that implement international projects, the country has long been known as an export giant. Especially with long-term trade agreements, currency pairs such as the euro and the US dollar offer special earning opportunities and, in return, high risks. If a price has been fixed for the long term, the devaluation due to exchange rate fluctuations can be enormous. For one of the two sides, this is an advantage, the other side pays extra.
The Euro Kurs has recovered only slightly so far, but is still a long way from its former dominance. For German companies, this offers opportunities in export trading, and the currency pair in forex trading has become significantly more profitable – but also more risky.
