The US dollar has been a hot topic of conversation in the financial world in recent weeks. Of course, Bitcoin has lost a lot of ground against the dollar, but our own Euro has gained the same amount as the world reserve currency after 20 years.
What’s going on with the Euro?
For the first time in more than 20 years, the US dollar has surpassed the euro. A painful situation for savers and certainly for those who rely on imports from the US or plan a nice vacation to the US.
A major reason for the euro’s poor performance against the US dollar is the policy of the European Central Bank (ECB). Unlike the Federal Reserve, the ECB has yet to respond to high inflation with interest rate hikes.
The ECB is expected to raise interest rates by 0.25 percent for the first time this month. They would probably like to, but it is unlikely that the ECB will act harshly. In addition, due to the conflict in Ukraine, there is an energy crisis in Europe.
Europe is largely dependent on Russian energy, and that’s a tough story right now. Unfortunately, unlike the Euro, the ECB cannot print energy. Until we find a solution to that environment, the only option for our euro is to go down.
Confidence in the Federal Reserve
Not only for Bitcoin, but also (to some extent) for the Euro, the trust rests on the Federal Reserve. If the euro continues to fall against the dollar it will not be beneficial for the US. This is not good for America’s import/export balance and could cause problems for the industry.
As a result, some analysts expect the Federal Reserve to “step down” and devalue its currency against the euro. You should assume the Euro/Dollar rate is 0.90.
We’re a long way from that at the moment, but if confidence falls, the ECB doesn’t intervene and the energy crisis continues, crazy things could happen. In that sense, it is very possible that we are not so bad with Bitcoin.
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