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Warning: Latest forecasts for the Euro Dollar exchange rate predict an 'intensive' movement back down to 1.2

  • The Euro Dollar exchange rate is currently trading 0.36 pct in the red at 1.3293.
  • The Dollar to Euro exchange rate is thus 0.7522.

Please Note: The above quotes are spot market wholesale rates; your bank will charge a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thereby delivering more currency. Learn more here.

Today we have already discussed the position held by Jyske Bank that advocates for an appreciation in the Pound to Euro exchange rate.

With regards to the Euro Dollar exchange rate we see the picture is equally negative.

Analyst Leander Dreyer predicts the bottom to fall out of EUR/USD:
best euro dollar rate

"Roughly, EURUSD has been trading within six figures in the past 12 months. We expect that this narrow range trading has almost come to an end and will result in EURUSD breaching below the important bottom level at 127 and will be trading in an intensive movement down towards the old breach at the 1.20 mark."

See Here for the exchange rate forecast tables.

According to Jyske Bank the three most important reasons why the euro has in the past 12 months maintained its value against the US dollar are:

  • In the euro zone, PMIs outperformed those of the US. They rose from 45 to above 50.
  • The trade balance in the euro zone has been above 1% of GDP in the past year whereas that of the US has been below -2.6%.
  • The balances of the central banks have shown the largest divergence since 2007. The Fed’s balance has continued to grow strongly (negative for USD) whereas that of the ECB has fallen back considerably due to the repayment of the LTROs (positive for euro).
  • The Fed’s coming scaling down of QE is expected to force up in terest rates and result in an underlying demand for US dollar.

What will driver the US dollar higher over the courses of the next year?

Backing the US dollar in the longer term Dreyer says:

"The growth divergence between the US and the euro zone will be more explicit in 2014.

"Consumers have a high degree of confidence in the economic development in the US versus the euro zone which will contribute to maintaining the positive growth rate in the US.

"US dollar will remain an attractive currency since US investment will remain attractive."

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