Donald Trump's return to the political arena is alarming for investors, since his economic views, as during the previous presidency, are clearly nationalistic in nature. The EUR/USD pair fell sharply, reaching a two-year low, due to fears that the trade wars that Trump will inevitably resume will lead to an economic crisis in the eurozone. Economic indicators confirmed the deterioration of the situation: the composite PMI fell below the 50 mark, signaling a reduction in economic activity. In this regard, markets expect a more aggressive monetary policy of the European Central Bank, which may lead to a fall in the euro to parity with the dollar. Such a scenario was already implemented in 2022 during the outbreak of the military conflict in Ukraine, when the euro weakened amid the energy crisis. Previously, a similar situation was observed in 2016, when the dollar rose sharply after Trump's election victory, and then weakened by 2017. Such dynamics may be repeated, especially if the minutes of the October Fed meeting turn out to be «dovish» and inflation in Europe decreases. At the moment, the dollar is holding at 107, and the euro is 104.
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