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Illustration: Aïda Amer/Axios

It's the euro's time now — at least that's how investors have been positioning recently.

What's happening: Speculators have raised their bets to the highest in nine years that the dollar will fall and increased bullish bets that the euro will rise to the highest level on record, Reuters reported citing data from the CFTC.

Driving the news: More money is flowing into the euro and euro-backed assets, including European stocks and bonds, as eurozone countries are seen bouncing back thanks to an $882 billion relief package passed by eurozone leaders and falling COVID-19 infection rates while the U.S. continues to struggle.

The big picture: “This is not a matter of growth this year or next year or predictions about the cycle — it’s really something more structural,” Nicolas Véron, a senior fellow at the Peterson Institute for International Economics, told Bloomberg.

  • “The budget deal changes the way financial markets look at the eurozone in a significant way."

By the numbers: The S&P 500 has outperformed the pan-European Stoxx 600 significantly, returning 3.2% year to date versus a 6.5% decline for the Stoxx, and 206% over the last 10 years vs the Stoxx's 33% gain, per FactSet.

  • The ZEW survey of economic sentiment in Germany, the eurozone's largest economy, rose to 71.5 from 59.3 the previous month. That was well above a forecast for 58.0 in a Reuters poll of economists, and the best reading since 2003, according to currency analysts.

The state of play: Analysts at the BlackRock Investment Institute announced they were raising their holdings of European equities to overweight, citing "the region’s robust public health infrastructure and a galvanized policy response."

  • "The different restart dynamics in the U.S. and Europe have also pressured the dollar, underscoring our preference for European equities and caution on U.S. stocks," they note.

Yes, but: The euro's 11% jump against the dollar since May has some in the currency market urging caution, as the last time investors packed into the euro like this in 2018 the market reversed and the dollar took flight against the continental currency.

  • Tuesday's market action may have been a preview as the greenback rose against most currencies. That was largely due to a reversal-of-risk appetite after Senate Majority Leader Mitch McConnell said negotiations in Congress on the next U.S. stimulus package had stalled.

The bottom line: Even though the U.S. is creating much of the global turbulence with rising trade tensions and an impasse on stimulus talks, the dollar likely would strengthen from safe-haven flows if risk appetite dries up again.

Go deeper

Updated Nov 9, 2020 - Economy & Business

Stock market rises after Pfizer coronavirus vaccine news

A face mask hanging on the fence of the New York Stock Exchange. Photo: Lev Radin/Pacific Press/LightRocket via Getty Images

The Dow closed up 2.9%, or 835 points, after Pfizer announced promising, though early, findings about the effectiveness of its coronavirus vaccine. The S&P 500 finished up 1.2%.

The state of play: The vaccine progress is fueling market optimism about a possible return to normal, as the coronavirus pandemic and social-distancing restrictions have held back the U.S. economy.

Off the Rails

Episode 2: Barbarians at the Oval

Photo illustration: Sarah Grillo/Axios. Photo: Jim Watson/AFP/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 2: Trump stops buying what his professional staff are telling him, and increasingly turns to radical voices telling him what he wants to hear.

President Trump plunked down in an armchair in the White House residence, still dressed from his golf game — navy fleece, black pants, white MAGA cap. It was Saturday, Nov. 7. The networks had just called the election for Joe Biden.

Fringe right plots new attacks out of sight

Illustration: Aïda Amer/Axios

Domestic extremists are using obscure and private corners of the internet to plot new attacks ahead of Inauguration Day. Their plans are also hidden in plain sight, buried in podcasts and online video platforms.

Why it matters: Because law enforcement was caught flat-footed during last week's Capitol siege, researchers and intelligence agencies are paying more attention to online threats that could turn into real-world violence.