Given the faster money creation in the United States than in the Eurozone, the growing external debt in the United States and the return to external assets in the Eurozone and the prospect of the creation of a Eurozone federal debt, it is logical to expect a marked appreciation of the euro against the dollar in the longer-term, according to economists at Natixis. Key quotes “The monetary approach to the exchange rate shows that the country where the money supply grows faster sees a depreciation of its exchange rate. There has been a faster rise in the monetary base (in central bank money) in the United States than in the Eurozone in the recent period due to the COVID crisis.” “The United States’ shortfall in savings and its external deficit come up against the euro zone’s excess savings and external surplus. This has resulted in the United States’ growing net external debt and the return to net external assets for the Eurozone, i.e. a situation of excess supply of dollars and excess demand for euros, which is conducive to an appreciation of the euro against the dollar.” “The historical trend is indeed that of a gradual introduction of federal debt in the Eurozone, which first finances investments in the European Union’s recovery plan and then broadens to finance the energy transition, investments for the future, etc. Euro-zone federal debt would be attractive, and investors would switch from US debt to this euro-zone federal debt, due to an increase in the euro’s weight in foreign exchange reserves, which would obviously be positive for an appreciation of the euro.” “This reasosing obviously rules out the emergence of a serious political crisis in the Eurozone that would threaten a break-up of the Eurozone and drive investors to switch to the dollar, as we saw from 2010 to 2014.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next USD/CNH faces extra consolidation near-term – UOB FX Street 2 years Given the faster money creation in the United States than in the Eurozone, the growing external debt in the United States and the return to external assets in the Eurozone and the prospect of the creation of a Eurozone federal debt, it is logical to expect a marked appreciation of the euro against the dollar in the longer-term, according to economists at Natixis. Key quotes “The monetary approach to the exchange rate shows that the country where the money supply grows faster sees a depreciation of its exchange rate. There has been a faster rise in the monetary base (in… Top Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.