Euro Vision: Is the Dollar Losing Its Dreamhouse?

Malibu Dreamin' Euro Leaning?

Hi Dreamhouse dwellers! It's Barbie reporting live from the ever exciting world of international finance. Turns out even in my fabulous life money matters! The buzz around the global market is that the euro is becoming quite the popular girl giving our good ol' U.S. dollar a run for its money or should I say 'plastic' money? Some central bankers and clever strategists seem to think the euro will continue to get stronger this year. It's like when I try a new career – everyone's watching to see if I'll pull it off. And the euro? Well it seems to be acing its new role!

Tariff Tantrums and Fed Fumbles

So why the sudden interest in euros? Apparently some folks are raising their perfectly sculpted eyebrows at the U.S.'s economic policies. Yannis Stournaras the governor of the central bank of Greece dropped some truth bombs saying all the tariff talk and the 'attacks on the Fed' are making people rethink their dollar devotion. It’s like when Ken tries to give me fashion advice – sometimes it’s just not what I want to hear! And remember 'Those who impose tariffs will be hurt first.' It’s like a fashion faux pas honey – it always comes back to haunt you.

Trade Deal Drama: A Real Cliffhanger!

The status of a potential U.S. European Union trade deal is in limbo! Drama drama drama! It seems that White House duties will be broadly higher on all goods coming into the U.S. from overseas than they were at the start of the year even if they are lower than the rates threatened back in April. In the meantime the euro has already had a roughly 14% increase against the dollar. It's like when I try to decide between two outfits – sometimes the choice is clear as crystal!

Tax Bills and Ticking Time Bombs

Even though President Trump passed a new tax bill some worry it might increase the federal deficit. More jitters among creditors are expected. It’s like when you throw a big party but forget to order enough pizza – everyone notices! However the status of the dollar is not going to change from one day to another but the euro is in a position to gain in international reserves. That will require the EU to complete its longstanding efforts to form a Banking Union and Capital Markets Union and reduce internal barriers to allow the euro to increase its role in international markets.

Rule of Law or Lack Thereof?

According to Ireland's central bank chief Gabriel Makhlouf what we're seeing right now with the dollar is a realignment a readjustment on the part of investors. It's not so much tariffs which get a lot of headlines but investors are seeing the rule of law in the United States actually weaken and they are responding accordingly because that means there's a greater risk to their investments and their assets and they're adjusting. It’s like when you realize your dream house needs some serious repairs – you start looking at other options!

The Future is Fluctuating!

What does the future hold? Well the euro and dollar rates are set to fluctuate with every update on tariffs monetary policy and more. But overall the vibe is pretty supportive for the euro. Francesco Pesole FX strategist at ING says the recent spike in geopolitical risk and oil prices drove only a small boost to the dollar highlighting its newfound fragility. The dollar's decline is that foreigners are no longer buying enough dollar assets to finance America's huge current account deficit. But you know what I say “Anything is possible!” So stay tuned financial fashionistas because this economic runway is far from over!