Euro consolidates near highs amid US debt risks

The situation on the global currency market remains favorable for the euro. On Monday, August 24, the EUR/USD pair is trading in the range of 1.1662-1.1687 dollars. Over the past month, the euro has strengthened by about 2.7% against the dollar.

After strong growth in mid-August, the European currency has moved into a consolidation phase near multi-month highs. The European Central Bank, in its last published reference rate on August 21, recorded 1.1699 dollars per euro — one of the highest levels in recent months.

The main reason for the current movement is the weakness of the American dollar.

Investors are increasingly concerned about the state of American public finances and the prospects for the growth of the US government debt. An additional factor was the decision of the US Treasury Department to increase the volume of reverse buybacks of long-term Treasuries. However, this measure has not yet led to a sustainable decline in US bond yields.

As a result, the market continues to cautiously reduce dollar positions. Reuters notes that on August 24 the dollar remains near multi-month lows, while the euro and some other currencies are near their maximum levels in several months.

It is particularly telling that pressure on the dollar persists even amid fairly strong American economic statistics. This indicates that at the moment investors pay great attention not only to the state of the US economy, but also to fiscal risks and debt burden.