During the 2017, the Federal Reserve System’s managing agency Federal Reserve Bank of New York manages the USD interior the established width of medium term band of the medium term price stability. This allows the USD investors to invest the USD funds into politically stable major currencies (EUR, GBP, CAD, AUD, NZD) and their denominated-debt securities to look for profit. Investment however shifted from Asian major currencies to the European major currencies, as well as from the European major currencies to the Asian major currencies interior the established width of medium term exchange rate bands. Shifting the investment from Asian major currencies to another European major currencies results the medium term price stability of major currency pairs manageable interior the width of their bands.
The accelerated economic growth of the US economy will be supportive to lift the politically stable nations’ economies, US allies, in particular. USD investors will limit their capital investment into the US allies which will be supportive to fuel the US allies’ economies and to strengthen the US allies’ currencies. At such, stronger US economes will strengthen NZD, AUD, CAD, GBP, EUR, JPY and CHF currencies in “medium and long terms” as well as their economies, fueled by the USD funds.
EURUSD
The strengthening of the EUR is confirmed by the U-shape currency band performance of the EURUSD to hit the rock of the bottom at 1.0400. The U-shape currency band has confirmed the strengthening of EUR against USD in medium and long terms, at such the European Central Bank (ECB) will be obligated for central banking market sterilization (short term cycle) to slower the strengthening of the EUR against USD in medium central banking market non-sterilization (medium term cycle) to match the ECB’s monetary policy for economic and financial stability. The fueling of the European economy by the USD investors will accelerate the European economy and to drive the inflation to upside risk which will be tackled by ECB by undertaking interest rate increase.
The ECB central banking market sterilization and non-sterilization will be confirmed by the performance EURUSD’s S-curve currency band in medium term. The S-curve currency band measures the lower and the upper bands of the short term (sterilization cycle) as well as the lower and the upper bands of the medium term (non-sterilization cycle). However, the exchange rate will be fluctuated daily, weekly and monthly interior the short and the medium terms bands and measured by the performance of Time Series currency band. Accordingly, the combination of the U-shape currency band, S-curve currency band and Time Series currency band represents the tools for assessment and the measurement of the exchange rate price performance in the market place.
The U-shape and the S-curve currency bands represent the interest rate differential based currency band’s expectation in medium and long terms in accordance to the principle of equilibrium exchange rate, where by the exchange rate to move from disequilibrium state (exchange rate at economic rate - EER) to equilibrium state (exchange rate at interest rate - EIR) of interest rate differential expectation in medium and long terms. In economic development, EER indentical to as “economic price” and most famous as the “shadow price” by the World Bank, and the EIR indentical to as “financial price” and most famous as the “market price” by the capital market players.
In conclusion, EURUSD will move to upward in medium term (medium term cycle , non-sterilization) as well as in long-term (long term cycle, non-sterilization) but will be pressured to downward in short term (short term cycle, sterilization). At such, downward pressure is “temporary nature” to slower the strengthening of EUR against USD in the market.
The accelerated economic growth of the US economy will be supportive to lift the politically stable nations’ economies, US allies, in particular. USD investors will limit their capital investment into the US allies which will be supportive to fuel the US allies’ economies and to strengthen the US allies’ currencies. At such, stronger US economes will strengthen NZD, AUD, CAD, GBP, EUR, JPY and CHF currencies in “medium and long terms” as well as their economies, fueled by the USD funds.
EURUSD
The strengthening of the EUR is confirmed by the U-shape currency band performance of the EURUSD to hit the rock of the bottom at 1.0400. The U-shape currency band has confirmed the strengthening of EUR against USD in medium and long terms, at such the European Central Bank (ECB) will be obligated for central banking market sterilization (short term cycle) to slower the strengthening of the EUR against USD in medium central banking market non-sterilization (medium term cycle) to match the ECB’s monetary policy for economic and financial stability. The fueling of the European economy by the USD investors will accelerate the European economy and to drive the inflation to upside risk which will be tackled by ECB by undertaking interest rate increase.
The ECB central banking market sterilization and non-sterilization will be confirmed by the performance EURUSD’s S-curve currency band in medium term. The S-curve currency band measures the lower and the upper bands of the short term (sterilization cycle) as well as the lower and the upper bands of the medium term (non-sterilization cycle). However, the exchange rate will be fluctuated daily, weekly and monthly interior the short and the medium terms bands and measured by the performance of Time Series currency band. Accordingly, the combination of the U-shape currency band, S-curve currency band and Time Series currency band represents the tools for assessment and the measurement of the exchange rate price performance in the market place.
The U-shape and the S-curve currency bands represent the interest rate differential based currency band’s expectation in medium and long terms in accordance to the principle of equilibrium exchange rate, where by the exchange rate to move from disequilibrium state (exchange rate at economic rate - EER) to equilibrium state (exchange rate at interest rate - EIR) of interest rate differential expectation in medium and long terms. In economic development, EER indentical to as “economic price” and most famous as the “shadow price” by the World Bank, and the EIR indentical to as “financial price” and most famous as the “market price” by the capital market players.
In conclusion, EURUSD will move to upward in medium term (medium term cycle , non-sterilization) as well as in long-term (long term cycle, non-sterilization) but will be pressured to downward in short term (short term cycle, sterilization). At such, downward pressure is “temporary nature” to slower the strengthening of EUR against USD in the market.
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