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EUR/USD reached the highest levels since August 2015, breaking above 1.16, only to  be slashed back over 100 pips and settle  around 1.15. The peak was  1.1616, around 100 pips short of that summer peak, correlated with the crash of the crash of the Chinese stock market at that time.

What  happened? The US dollar made a comeback  across the board. Indeed, the  total sell-off of the greenback was exaggerated. With a renewed slide in oil prices and some selling of stocks, the US dollar gained back some ground, including against the Japanese yen, that was surging beforehand.

Yet again, the events had nothing to do with the euro, which is taking a back seat in these events. However, it is interesting to see that in one aspect, the ECB’s recent monetary stimulus does have an effect: the euro is not a safe haven any more, as it used to be back in that summer.

The euro played alongside the yen, attracting  repatriated funds in times of trouble and rising when stock markets crashed. This is not the case any more. We have seen the euro get in and out of the safe haven camp several times in the past year. It first entered the camp in the Spring of 2015, after the dust settled from the ECB’s successful implementation of the initial QE program. It reacted positively to bad news about Greece and negatively when an aGreekment was signed.

It took a step outside the camp in the  Autumn of 2015 but still returned back to it.

The recent addition of 20 billion euros of monthly QE money, the cut of the  main lending to rate to a round 0% and the cut of the deposit rate to -0.40% did not yield the desired crash of the common currency. That is due to Draghi’s “that’s it” statement (even if the door is not fully closed on more stimulus).

So while the euro is at high levels against the dollar and also against the Chinese yuan, at least we can see that it is not so safe any more. In the next crisis it could fall instead of rising.

That crisis could come from Greece which is deadlocked with its creditors, from Italy and its ailing banks, from Spain and its second round of elections in 6 months or from an “unknown unknown”.

Here is the rise and fall of EUR/USD on high ground:

EURUSD May 3 2016 going wild