Investing.com – Add Italy’s political crisis to the reasons the single currency’s rally against the dollar may be over.
After a 14% surge against the dollar in 2017, the euro has been slumping since April, falling as low as the $1.15 level.
Analysts say the euro’s 6% decline since its 2018 peak is mostly the result of unfavorable fundamentals.
While the U.S. economy has strengthened, there are signs the eurozone recovery is faltering.
At the same time, the U.S. yield curve has been flattening while the European one has been widening, thanks to the Federal Reserve’s commitment to raising interest rates.
Market watchers say the U.S. currency is also benefitting from an unusual force — dollar repatriation. The tax change allowing U.S. companies to bring back foreign-held profits at a lower, favorable rate has made the dollar attractive.
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