13.11.201900:53 Forex Analysis & Reviews: Euro - a life support for emerging markets currencies?

The European currency seeks to score points and squeeze the greenback. According to experts, the euro almost managed to cope with this task, but only in relation to the currencies of developing countries. The greenback is still leading in the EUR/USD pair.

The popularity of the euro as a financing currency is constantly growing in the markets of developing countries. This year, sovereign issuers raised €51.2 billion ($56.4 billion). There are seven weeks left before the start of the new year, and this amount has already exceeded the previous record of €39.9 billion collected for 2016. According to economists, this means an increase in the issuance of new bonds by 80% year on year. At the same time, the issue of dollar bonds increased by only 2.7%. Analysts conclude that the euro takes away a significant market share from the greenback.

However, it is not so easy to push the greenback off the podium. The US currency remains a priority among emerging market governments. With regard to securities in euros, they now account for 30% of foreign borrowing. According to the Bank of America Merrill Lynch, the volume of receipts in debt funds of emerging markets reached $ 36.3 billion. In early autumn, sovereign sales of Eurobonds resumed, the flow of which slightly dried up in July-August 2019. They continue to this day.

Currently, the European currency is under pressure due to weak macroeconomic statistics from Germany. On Tuesday, November 12, the wholesale price index was published, which slipped 0.1% last month. On an annualized basis, this indicator fell by 2.5%, analysts said.

At the moment, the EUR/USD currency pair has continued its downward movement in the direction of the horizontal support level at 1.0989. After relatively good performance this morning in the range from 1.1035 to 1.1026, the pair began to sag again. The fall intensified, reaching 1.1021.

Now the EUR/USD pair runs within the critical limits of 1,1014–1,1015, however, analysts believe that the low has not yet been passed.

Analysts expect a correction from the EUR/USD pair and a further decline in the euro. However, the single currency seeks to maintain its position and not slide even further.