Mar 10 • 📣 News & announcements 📣
Biggest U.S Dollar sell off in 2 years
The U.S. dollar saw its largest sell-off against the euro in over two years, dropping 4% in a single week as concerns over Trump’s tariffs and broader geopolitical policies rattled markets. The effects of these tariffs are already being felt by businesses and consumers alike. It remains to be seen if, and how quickly, these policies will be reversed.A key driver of recent euro strength is the shift in U.S. foreign policy, particularly its stance on Ukraine, which has accelerated defence spending across Europe. The EU has committed an additional €800 billion to strengthening its defences, and Germany has eased fiscal constraints to allow for a significant increase in government spending.
On Thursday, the European Central Bank (ECB) cut interest rates by 0.25%, but as this move was widely expected, the exchange rate remained largely unaffected. However, market sentiment toward the Eurozone has improved due to Germany and the European Commission’s investment commitments.
Many analysts are now revising their EUR/USD forecasts upward, signalling a stronger outlook for the euro.With these developments in mind, it seems likely that the days of EUR/USD trading between 1.00 and 1.05 are behind us. If the U.S. job market continues to weaken, if tariffs drive up consumer prices, and if businesses hesitate to invest due to uncertainty around future U.S. economic policies, further USD weakness is likely.The only certainty at the moment seems to be volatility. The 4% move in EUR/USD last week faced little resistance, indicating that markets may be positioning for a more prolonged dollar sell-off.
A 4% move in monetary terms has made €250,000 nearly $11,000 more expensive to purchase.
To mitigate risks, tools like market orders, stop losses, and forward contracts are essential for managing against potential currency swings. Acting strategically in this environment is key to securing favourable rates and protecting against sudden market shifts. We recognise that clients have different risk appetites, and our role is to build an FX strategy tailored to those needs. The highest-risk approach is not having a strategy at all.
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Sarah from Spartan FX
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Biggest U.S Dollar sell off in 2 years
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