The legend in the InstaSpot team!
Legend! You think that's bombastic rhetoric? But how should we call a man, who became the first Asian to win the junior world chess championship at 18 and who became the first Indian Grandmaster at 19? That was the start of a hard path to the World Champion title for Viswanathan Anand, the man who became a part of history of chess forever. Now one more legend in the InstaSpot team!
Borussia is one of the most titled football clubs in Germany, which has repeatedly proved to fans: the spirit of competition and leadership will certainly lead to success. Trade in the same way that sports professionals play the game: confidently and actively. Keep a "pass" from Borussia FC and be in the lead with InstaSpot!
Why do higher oil prices and the US status as a net oil exporter support the dollar against the euro?
Higher oil prices and the United States' status as a net oil exporter strengthen the dollar relative to the euro. This happens because improved trade conditions for the US, slow price adjustments, and central banks' commitment to inflation targets force the nominal EUR/USD exchange rate to bear most of the adjustment burden. This also leaves room for a reversal if oil prices decline.
The United States is now a net exporter of oil, unlike the eurozone, which remains a net importer. When oil prices rise, all else being equal, the US gains an advantage in trade—American export prices rise faster than prices in the eurozone.
If the price of US oil exports surges relative to prices in the eurozone, Americans' disposable income increases significantly, because Europeans will end up paying more for the essential oil they import from the United States.
As a result, the real exchange rate is determined by two elements:
In theory, adjustment could occur through both channels. However, in most Western countries, central banks aim to keep inflation at a specific target. Because of this, price adjustments occur very slowly. As a result, the nominal exchange rate carries the main burden of adjustment, bringing the system back toward equilibrium. This implies that the nominal exchange rate is likely to rise.
The terms-of-trade effect is likely the main reason for the strong strengthening of the US dollar. The fact that the US is now a net exporter of oil also indirectly means better protection for energy-intensive industries in the US compared with Europe. Consequently, economic growth in the US is expected to be more resilient.
Exchange rates adjust faster than prices and have already incorporated changes in trade dynamics. However, if the conflict ends earlier than expected and the rise in oil prices proves temporary, the effect could quickly reverse.
In other words, if oil prices decline, the EUR/USD pair could quickly return to its previous levels and may even surge to higher ones.
For now, however, the fundamental backdrop suggests further downside for the pair. From a technical perspective, oscillators remain in negative territory, confirming the advantage of bears in the market. At the same time, the Relative Strength Index (RSI) has moved into the oversold zone, suggesting the possibility of some consolidation.
*এখানে পোস্ট করা মার্কেট বিশ্লেষণ আপনার সচেতনতা বৃদ্ধির জন্য প্রদান করা হয়, ট্রেড করার নির্দেশনা প্রদানের জন্য প্রদান করা হয় না।
ইন্সটাফরেক্স বিশ্লেষণমূলক পর্যালোচনাগুলো আপনাকে মার্কেট প্রবণতা সম্পর্কে পুরোপুরি সচেতন করবে! ইন্সটাফরেক্সের একজন গ্রাহক হওয়ায়, দক্ষ ট্রেডিং এর জন্য আপনাকে অনেক সেবা বিনামূল্যে প্রদান করা হয়।
