🔍 Fundamental Analysis of EUR/USD – Prolonged War and the Contagion of Uncertainty
German Chancellor Olaf Scholz has stated that diplomatic efforts to end the war in Ukraine have reached a deadlock. In parallel, Donald Trump’s recent remarks expressing dissatisfaction with Putin further reinforce expectations that the conflict may continue.
The recent 300-pip rally in the euro was primarily fueled by optimism over a potential ceasefire. However, as I previously noted, a broader underlying factor contributing to the euro’s strength has been capital flight from the U.S. dollar, driven by increasing uncertainty in the U.S. political and financial outlook.
Now, with the possibility of a prolonged war back on the table, investor confidence in the eurozone may also start to waver. This uncertainty is not solely rooted in the war itself, but rather reflects a spillover effect—as capital fleeing U.S. markets seeks alternatives, it simultaneously transmits fear and instability into the euro area.
In this context, one might say that the economy behaves like a virus: not because of geopolitical conflict alone, but because investor sentiment and uncertainty spread rapidly across borders, infecting markets on a global scale.
German Chancellor Olaf Scholz has stated that diplomatic efforts to end the war in Ukraine have reached a deadlock. In parallel, Donald Trump’s recent remarks expressing dissatisfaction with Putin further reinforce expectations that the conflict may continue.
The recent 300-pip rally in the euro was primarily fueled by optimism over a potential ceasefire. However, as I previously noted, a broader underlying factor contributing to the euro’s strength has been capital flight from the U.S. dollar, driven by increasing uncertainty in the U.S. political and financial outlook.
Now, with the possibility of a prolonged war back on the table, investor confidence in the eurozone may also start to waver. This uncertainty is not solely rooted in the war itself, but rather reflects a spillover effect—as capital fleeing U.S. markets seeks alternatives, it simultaneously transmits fear and instability into the euro area.
In this context, one might say that the economy behaves like a virus: not because of geopolitical conflict alone, but because investor sentiment and uncertainty spread rapidly across borders, infecting markets on a global scale.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.