Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
EUR Forecast 1Q-2020: Weakness Likely to Persist in Early 2020 Before Rallying Later in The Year

EUR Forecast 1Q-2020: Weakness Likely to Persist in Early 2020 Before Rallying Later in The Year

Martin Essex, MSTA, Analyst

The persistent weakness of the Euro against the US Dollar, which began in late September 2018, will likely persist in the first few months of 2020 although a rally could follow as the US Presidential Election in November comes closer and climbs up the trading agenda.

For the Euro, the key problem is that economic growth in the Eurozone remains weak and the European Central Bank may therefore decide to ease its monetary policy even further. With the ECB deposit rate currently at -0.5% that might seem fanciful but there is nothing to stop its Governing Council from lowering the rate to -0.6% or -0.7%, even though market pricing towards the end of 2019 was still suggesting that rates will be on hold throughout 2020.

New ECB President, Old ECB Policy

Moreover, and perhaps more importantly, there is nothing to stop the ECB from increasing the asset purchase program that it restarted in November 2019 at a monthly rate of €20 billion or from widening the array of assets that it buys. It could also amend its forward guidance to suggest that monetary policy will be eased even further if seen as necessary. The previous ECB President Mario Draghi told his successor Christine Lagarde to “never give up” on propping up the Eurozone economy and that is advice she will surely take. There can also be little doubt that Lagarde will remain dovish and continue to press the Eurozone’s governments to ease fiscal policy by spending more or taxing less to help boost economic growth.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES