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| The EUR/USD fall - Feb 2022 |
I'm trying to comprehend the relation between the EUR/USD rate and the war. The rate has been falling since the war started. But if you look close, you'll see that in fact it has started falling two weeks before the war. And if you look even closer, you'll see it started falling in mid-2008. And probably it will fall further for a number of reasons, so the most obvious strategy should be - buy on tops / buy on dips.
However, under no circumstances, we may assume the relation is so simple. First, a cease-fire will probably send the rate up few hundred pips, second, the rate may also spike without the cease-fire, as, according to many traders, the pair seems to be quite "oversold" at the moment.
The most important thing, the traders need to understand, is that the cease-fire will come as a surprise to everyone. Many holders of EUR/USD shorts will be caught off-guard. Therefore they should assess their risks very cautiously at the moment. If you want to wait out this spike, or use it as a selling opportunity - it's fine. Just make sure, your risks are not too high. It may be the time for crazy moves. Be ready for 1.20, 1,25 or even 1,30.
Once the war stops, the come-back to business as usual with Russia will take some 6 months. The North Stream 2 will be up and running quickly, and convincing Germany to allow it will not be difficult at all. The investment in Russian stocks will bring several hundred percent, as the Russian enterprises and the economy as a whole will slowly come back to life. The more stable times will come, and during the stable times, the dollar usually gains against the euro. The route towards the parity will continue.