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Main » 2018 » October » 9 » The fall of the euro will be limited; The dollar will fall in popularity
01:45
The fall of the euro will be limited; The dollar will fall in popularity

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Bengaluru (Reuters) - The euro will resist the latest political turmoil in Italy, and any short-term decline will be limited, but the popularity of the dollar in six months will decline, the survey showed currency strategists. 

After a better start in the last year for the first time since 2003, the single currency fell by almost 4% during 2018 mainly due to the increase in rates in favor of the dollar against the backdrop of strong economic performance and the US rate tightening policy of the Federal Reserve.

 

 

 

 

Markets have recently been upset by the uncertainty associated with the debt burden in Italy, fiscal plans and future relations with Europe, which pushed the single currency to a six-week low of $ 1.1504 last Tuesday. 

But the latest survey of more than 70 analysts, conducted in the period from 28 September to 3 October, showed that the euro will rise and trade at a cost of $ 1.16 for the three months of about $ 1.15, recorded last Wednesday. It is expected that the single currency will rise to $ 1.22 a year, about 6% of this index.

That the single currency is expected to fall to a maximum of 1% to a low of $ 1.14 over the next three months, according to the average estimate of 30 analysts who responded to an additional question. But the value of the currency will be comfortably above the 13-month low of $ 1.1297, registered in August. 

"To the euro fell significantly below $ 1,150, and dropped to previous lows, is really necessary, that the situation with debt in Italy has worsened and challenged the sustainable growth of the eurozone and the euro in the future", - said Lee Hardman, currency strategist at MUFG. "It is not our base-case scenario."


Support for the dollar will fall in 2019


While currency speculators increased their bets against the dollar the second consecutive week, the strategists in the latest Reuters poll almost unanimously reported that the dollar rally has ended. 

Most strategists who responded to a separate question, said that the world championship of the US dollar last only another three months or half a year. 

Several factors contributed to the dollar's rally is expected to soon disappear, most of the major currencies are expected to rise throughout the year. 

Presumably, that the pound will strengthen against the dollar, to the moment when Britain will leave the European Union. But it is predicted that within the next year it will restore the loss obtained after the referendum in 2016.

"We believe that the EU and the UK eventually conclude Brexit-agreement. At this stage it is still very uncertain. The pound could drop slightly before the deal will be reached, "said Lee Hardman. 

"But we continue to believe that the whole deal is more than likely since both parties want to avoid a scenario without the transaction. This should lead to the strengthening of the pound. " 

 

Based on materials WELTRADE

 

 

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