At Any Rate Global FX: 1.20 on EUR/USD and euro bloc + model take-aways
Apr 25, 2025
James Nelligan, a Global FX Strategist at JPMorgan, shares insights on the recent surge of the EUR/USD to 1.20. He discusses how U.S. economic trends and Europe's fiscal policies are shaping currency valuations. The conversation shifts to the UK's fiscal challenges and the impact of rising defense spending in the eurozone. Nelligan highlights the complexities of currency ratings, the strengths and weaknesses of the euro amidst market volatility, and the balance of optimism and caution in the euro's future.
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Eurodollar Strong Beyond Targets
- Eurodollar surged faster than expected, exceeding targets of 1.14-1.16 to approach 1.20.
- US moderation and global rebalancing drive longer-term euro strength despite short-term overvaluation.
Sterling Vs Scandies Fiscal Space
- UK sterling is more vulnerable to global tariff shocks due to fiscal constraints and a slowdown risk.
- Scandinavian currencies benefit from stronger fiscal space and defense spending ambitions amid market shifts.
Swiss Franc's Dollar Alternative Role
- Swiss franc rallies as a notable reserve currency amid search for alternatives to the dollar.
- Swiss National Bank faces constraints with limited easing room and US pressure on reserves intervention.