EUR/USD: Barclays bank lists 2 factors that justify pair's fall on the forex

Barclays believes that the EUR/USD will continue to fall on the forex, driven in particular by spreads and political risks in Europe.

"The weakness of the EUR/USD following the US election is expected to persist again this week and reflect two factors: 1) The widening of US-EU rate differentials, and 2) Increased political risk premiums in the EU zone.

2-year US-EU rate differentials declined by almost 10 points last week, with markets anticipating higher inflation and a tightening of Fed policy under Trump's presidency.

For the EUR, we believe that the Trump victory is another example of the policy of anger, of which the euro area is particularly vulnerable. The political risk premium in EUR has increased, and should continue to grow in the coming year amidst a very busy European political calendar."