The end of the worst performance for the single currency since 2015 is coming to an end. That's what they say from JP Morgan.
According to the bank, the euro is likely to find a bottom against the dollar early next year and will continue its rise. This is likely to happen when we begin to observe the US economy losing steam to shake support for the US dollar. Their forecast is for the euro to reach $ 1.11 in the first quarter, down 2.2% below the current levels before rising to $ 1.18 by the end of the year.
The European single currency will receive adequate support after the US economy has slowed to levels below those of Europe in 2019, especially since fiscal stimulus has begun to lose its strength and the Fed's tightening has not begun to work. The euro will also find support from the ECB's intentions to start raising interest rates next year.
The euro has lost 5.5% of its value against the dollar this year, making it the worst for the 2015 currency.
Let's recall that JP Morgan's forecast for interest rates is to raise them five more times in the period from December this year to the end of 2019, and to slow down in 2020. According to JP Morgan, the currency of creditors rather than debtors will be preferred in the late phase of economic growth, whether by the ECB raising interest rates once or twice in 2019.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
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