The discrepancy between macroeconomic statistics in Europe, where it is improving, and in the US, where it is deteriorating, supports the euro against the dollar.
Excessive optimism in the US and the same excessive pessimism in Europe were included in the pair's quotes last year. However, now the situation is changing: in addition to the divergence in macro statistics between Europe and the US, there is also a divergence in the monetary policy of the ECB and the Fed. In particular, the first Central Bank is approximately in the middle of the rate hike cycle, while the second is close to its completion.
Citi Economic Surprise Index for the Eurozone (pink) and the US (orange). Source: Bloomberg
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