© Gennadiy Goldberg
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In general, I think that the U.S. economy is much more surefooted than Europe at the moment and that should leave the Euro slightly weaker throughout the coming year. This is due to the fact that Europe has just barely emerged from recession, whereas the U.S. has been recovering at a fairly lackluster pace over the last couple of years; however, the nation's economy might accelerate in the upcoming year. In my opinion, the Euro should be set to fall versus the greenback in the year of 2014.
What performance do you expect from the U.S. Dollar versus its major counterparts during the first quarter of the year 2014?
During the first quarter and throughout 2014 in general we expect the U.S. Dollar to outperform as U.S. assets should be in demand, largely because the U.S. will be at the forefront of the global economic recovery. The U.S. led the crisis all the way down and it is leading the way out as well. I think the fundamentals of the U.S. economy are very well aligned or much better than they have been at least in the past five years. Therefore, if there is time for the U.S. to start growing more substantially, it will be next year as there is going to be less fiscal drag, which should help shift up in the growth outlook. We expect growth to accelerate to 2.5-3% in the coming year compared to roughly 2% that we have seen during this year. To my mind, the U.S. is set to outperform fairly substantially in 2014.
What are your forecasts for EUR/USD for the end of Q1 and the year-end?
For EUR/USD we are looking for a further decline to about 1.27 at the end of the first quarter and 1.22 by the end of the year 2014. This is due to the fact that the U.S. growth should shift up next year and the Eurozone should remain fairly sluggish, even though the bloc has emerged from its recession.