In July last year, the European currency fell below the dollar for the first time in 20 years. JPMorgan confident ECB’s hawkish stance will support European currency
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Strategists at Deutsche Bank and Morgan Stanley believe that the euro may rise against the backdrop of warmer weather in the eurozone. The experts of these banks predict the euro will rise to $1.15, and the analysts of the Japanese financial holding Nomura International – up to $1.1 by the end of January, writes Bloomberg.
“We have wonderful weather. This is a very reliable airbag that will help the eurozone overcome
recession
,” TD Securities currency strategist Mark McCormick said in an interview. Bloomberg TV.
Gareth Gettinbeam, portfolio manager at Aegon Asset Management, also noted that the risks of depreciation of the euro are reduced due to falling gas prices. In early November, the exchange price of gas on the ICE Futures site for the first time since September 2021 fell below $700 per 1,000 cubic meters. This happened against the backdrop of a warm winter in the region and large gas reserves in European storage facilities.
As writes Bloomberg, JPMorgan Chase strategists are still wary of the economic recovery in the region, but they are confident that a more hawkish stance from the European Central Bank (ECB) will support the European currency. According to experts, this year the ECB will raise interest rates by about 150 bp, while the US Federal Reserve is expected to raise only 60 bp.
Euro/Dollar
EUR/USD
$1,078
(+0,47%)
In July last year, the euro for the first time in 20 years became cheaper dollar. The weakening of the European currency was associated with fears of an economic downturn amid uncertainty about the supply of energy resources from Russia, as well as against the backdrop of the Fed’s tight monetary policy due to inflation, which reached a maximum in more than 40 years.
The euro was put into circulation on January 1, 1999. Initially, it cost more than the dollar, for the first time the euro fell to parity with it in December 1999. Then there were periods
volatility
but after returning to parity in 2002, the euro began to rise and maintained its superiority over the dollar until the summer of 2022.
A macroeconomic term for a significant decline in economic activity. The main indicator of a recession is the decline in GDP for two quarters in a row.
Change in price over a certain period of time. Financial indicator in financial risk management. Characterizes the trend of price volatility – a sharp drop or rise leads to an increase in volatility.
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