Dollar to retain the upper hand

Despite a considerable amount of volatility on financial markets and diverging trends in US and eurozone monetary policies, the key euro/dollar exchange rate has been very range bound over the past year, largely trading in a $1.06-$1.15 corridor.

This period of stability followed the big exchange rate moves in the second half of 2014 and opening couple of months of 2015 that saw the euro fall sharply, declining from $1.40 to a low of $1.05.

The slowdown in emerging economies, weakening commodity prices, as well as increased risk aversion and volatility in financial markets have helped currencies such as the euro and yen to stabilise over the past year, following their very steep losses in the period before that.