Obviously in a currency pair one goes up and one goes down in relation to each other. It should be clear from the brief examination of the foreign exchange rates between the currency pair noted above that there is a reciprocal relationship between the euro and the US dollar. Recently the euro was in a downtrend in a narrow trading range between 1.20 and 1.10, but that has ended as indicated above.ĭiversification of Currencies in a Portfolio The Great Recession saw the euro almost reach USD 1.60 before a downward trend set in, and by 2015 the European currency was down to 1.10. The next five years show an improvement to 1.35. An examination of the history of the EUR/USD exchange rate shows that the initial value attributed to the euro, 1.15, was too high as the euro fell to around 0.85 by the year 2005. James Hanshaw has argued in a Seeking Alpha article ( Assuming The Euro Will Recover Is 'Suicidal' ) that the long-term trend of the euro has been downwards and that a recovery is unlikely. On 4 th December 2020 it was 1.2143.Įuro Dollar Exchange Rate (EUR USD) - Historical Chart The Long-term Trend of the Euro Has Been Down
It is clear that the US dollar weakened substantially against the euro after July 2020.
November saw the euro strengthen further against the US dollar and reach 1.21. Between May and July the euro recovered to 1.14 and after July changed the trend and remained in a fairly narrow trading range at 1.18. In March USD 1.14 was reached by the euro only to go down to USD 1.08-1.10. The Macrotrends chart below shows that one euro was about USD 1.12 at the beginning of the year. 2020 has seen the US dollar weaken against the euro.