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Euro Ends Year High On Dollar, But 2021 Brings Caution

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The euro took a breather from the dollar Thursday, and even though the money that is solitary set to close higher for the season, analysts require a healthier dose of care going into 2021.

EUR/USD fell 0.68% to $1.2211, but continues to be on track to up close about 9percent higher for the entire year.

The euro has benefitted from weakness into the dollar because the pandemic pressed the Federal Reserve to pull all the financial policy stops including slashing prices to near zero to cushion the pandemic-led fallout that is financial.

But heading into 2021, the mass distribution of vaccines could steady the U.S. economy, helping it outperform its peers, giving the dollar a tailwind that is much-needed.

Yet, others suggest that the U.S. outperformance versus EU may well not prompt a rebound straight within the greenback in the event that gap in growth is not significant.

“Relative financial conditions between the Euro area plus the US are pointing to a significant possibility of US outperformance associated with the Euro area in 2021 but provided that the development that is global is identified as synchronized and broad-based, the USD laugh is telling you to buy EUR vs. USD, “Nordea stated.

The euro appears to be following length of history, indulging in its post-election slump seen previously in another ominous sign.

“(The) EUR/USD has behaved very much like after the presidential elections of 2000, 2004, 2008 and 2012. And if this history keeps rhyming, the pair may peak – surprisingly early – around New Year’s Eve,” Nordea included. The euro took a breather from the dollar Thursday.

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