EUR: the resilient euro rebounds on every dip, here's 2 reasons why

The euro finds buyers at every turn, despite a harsh war at its doorstep. So how is the euro so resilient?

When Russia invaded Ukraine, many were quick to call for the end of the European Union as we know it and of the euro. This is not the first time the common currency has been called 'doomed' by traders who say it is impossible to survive.

After all, the European Union was built on crises. Nevertheless, it has found a way to survive each one - starting with the Greek sovereign crisis and ending with Brexit.

Now, the Russian-Ukrainian war is another cause for concern for Europe, already weakened by the Brexit. But on the contrary, a unified Europe reacted quickly to an invader, which would have been much more difficult for a single country.

Either way, the common currency has found buyers on every downside. For example, see the EUR/JPY chart below.

After the initial drop on fears of what the war in Ukraine would bring, the pair rallied to 130. Judging by the technical picture, the logical target is around 132, where the pair has struggled to find buyers.

So why is the euro so resistant? Here are two explanations: the ECB will not delay the normalisation of its monetary policy, and the war in Ukraine has shown a unified European response.

ECB accelerates tapering of asset purchases
The ECB's monetary policy decision and press conference in March showed the central bank's determination not to delay the normalisation of its monetary policy.

In other words, the war in Ukraine will not stop central banks from tightening policy, and it surprised the markets by accelerating the reduction of its asset purchases, making the single currency more attractive to investors.

Russia invading Ukraine triggered a unified European response
Russia surely thought that Ukraine would fall in a matter of days, but this was not the case. One of the reasons, besides the bravery of the Ukrainian people, was the unified European response.

Never before has the European Union responded so quickly to a crisis - not even in response to the pandemic.

Such unity shows investors that Europe in its current format is here to stay because it speaks with one voice even in the face of evil. So why not buy the common currency then?