© Richard Falkenhall
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We expect the Euro to continue being weak and underperform among other currencies. For instance, if we look at the Euro versus Dollar, which is the pair that most people watch, we expect it to trade down towards the parity level by the end of this year. As a matter of fact, the major forces behind the European currency weakness are, of course, the divergence in the monetary policy between the US economies since the markets expect a rate hike in the second half of this year.
Meanwhile, the European Central Bank will most likely continue to stick to its monetary policy without any significant changes at least until September 2016. Keeping all this in mind, these two central banks, the ECB and the Federal Reserve, are moving in completely different directions which, no doubt, brings the exchange lower.
What will be the main drivers for the Euro during the second quarter of this year?
Of course, among all the factors that could define the further performance of the Euro, I still believe that the Central Bank and its monetary policy as well as the relative monetary policy between other banks will remain the key driver for the Forex market in general, particularly in case if we look at the Euro area. Therefore, a further monetary policy easing will impact as a negative key factor for the currency going forward.
What are your forecasts for the EUR/USD, EUR/GBP for the end of this year?
Regarding the Euro versus the Greenback pair, we believe that the parity will be reached. As far the Sterling is concerned, we expect for the EUR/GBP to go down towards 0.69 by the end of this year