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US Dollar Index : Currencies overview: Euro wakes up, ruble struggle

04/08/2021 | 10:15am

The major recent trends have been reversed recently, with the dollar falling against the euro following a solid strengthening sequence and the rouble falling as geopolitical tensions re-emerge in the East. But will both phenomena be sustainable? The robustness of the emerging recovery in the US and the monetary tightening policy initiated by the Russian central bank could limit their duration

The ruble is suffering

The renewed tension in Ukraine has sent the ruble on a downward slope against the euro and the dollar. The Russian currency is trading at a year low of RUB77.84 against the USD and RUB92.43 against the EUR. "The ruble could remain under pressure due to rising tensions between Russia and Ukraine and the risks of further sanctions against Moscow," Unicredit points out, although it believes a return above USD77 is a buying opportunity, given the inflation-induced rate path. The Russian central bank, which is targeting 4% inflation in the medium term, had already raised its key rate in March, against all expectations and for the first time in more than three years. March inflation reached 5.8% year-on-year in Russia

RUB vs USD (en jaune) et vs EUR (en rouge) en 2021.

RUB vs USD (yellow) and vs EUR (red) in 2021.

The dollar has corrected

The dollar index has continued its decline in recent days. The EUR regained ground against the USD, until it returned to USD 1.1881. "The US dollar's weakness so far this week has been more against the low-yielding currencies of the Swedish krona, Swiss franc, euro and yen. It has held up better against the pound and the Canadian dollar," says Lee Hardman, currency analyst at Mitsubishi UFJ

The euro is recovering (a little) but is still a long way from its February peaks
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