Currency News: EUR/USD Outlook

Currency News

Currently, 1 euro is equivalent to $1.06. This is a drastic change from 2011, when the difference between the two currencies was more than 50 cents greater. The I Know First algorithm has been correctly predicting the appreciation of the dollar in comparison to the euro over that time, an example of which can be seen here. Now, the question has become whether the value of the dollar will surpass that of the euro. It depends on the behavior of the two currencies’ economies.

currency news

The euro has been driven down by uncertainty in the European Union. The largest factor is the situation surrounding Greece, which still could possibly leave the economic collective as it threatens to default on loans. Other factors in the region are also harming the euro’s value, such as the struggling economy. Eurozone GDP grew by only 0.3% in the fourth quarter, which is very weak, especially when compared to the US. Quantitative easing was implemented to help the economy, which sent sovereign debt yields tumbling. This has caused European traders to invest in US treasuries and hedging out the currency exposure, sending the value of the dollar higher.

Besides the weakness of the euro and the eurozone economy, the economic recovery in America is causing the dollar to surge against all currencies. The US economy is looking very bright, even as it has hit a few snags in recent months. While there is some speculation that the Federal Reserve could delay interest rate hikes until later this year, they are still imminent when compared to elsewhere, including in the European Union. As the European Central Bank implemented a program of quantitative easing, the Federal Reserve discontinued theres in 2014, and the GDP has continued to increase by 2 to 3% per year. With the weakness of the Eurozone and the continued recovery of the American economy, it is inevitable that the value of the dollar will surpass that of the euro this year.

Comments are closed.