Top 10 Euro To Dollar Exchange Rate Forecasts: EUR/USD Analyst Outlook, Views And Currency Predictions – Exchange Rates UK

Exchange Rates UK Research team have compiled a roundup of expert FX views on the current EUR/USD outlook from 10 leading FX analysts.

Ten Expert Currency Analyst Views and Opinion on Euro Near to Medium-Term Outlook

Shaun Osborne, Chief FX Strategist at Scotiabank

“EUR/USD short-term technicals are neutral. The common currency touched below yesterday’s intraday low and looks set to settle, at least for the near term, in the low 1.08s—strong support around the 1.08 mark—after failing to sustain its early hours gains to as high as 1.0879 and moved back into the broad negative trend from its late-Tuesday peak. The EUR’s late-week losses may be nearing an end and we think a close above 1.08 for the week could set it up for a minor rebound on Sun night/Mon morning although price action since the latter part of March suggests the EUR will not make a definitive move above 1.09 any time soon. Resistance is 1.0880/90.”

Avery Shenfeld, CIBC

“We are a little more negative than the consensus [Durable Goods Orders – March], which could see the USD fall along with bond yields.

Chris Turner, ING

“In his “moment of truth” speech, French President Emmanuel Macron further underscored the need for debt mutualisation (coronabonds) in order to deal with the Covid-19 crisis and keep the EU project sustainably and credibly alive. Still, opposition from northern EU states remains in place and the bar is set high for a solution to be agreed at the EU leaders video conference call next Thursday. Even without a coronabond, our economists expect the EU to continue muddling through and eventually come up with a face-saving solution. This in our view should prevent any large risk premia being built into the euro during the current Covid-19 crisis and risk premia driven euro downside (even with the help of the European Central Bank, which should soften the BTP´s downside via the ECB’s Pandemic Emergency Purchase Programme). We thus continue to see higher EUR/USD into the summer months as the Federal Reserve’s large balance sheet expansion weighs on the dollar.”

Lars Sparresø Merklin, Senior Analyst at Danske

“A natural pre-position may be to see EUR/USD higher from here as the global economy recovers from coronavirus – after all, USD is at historically strong levels and valuation suggests EUR/USD belong closer to 1.20 than e.g. parity. We see two key obstacles for that to play out, though. First, the crisis may not be behind us just yet despite virus numbers peaking due to uncertainty regarding the economic fallout and the risk of new virus waves. Second, the crisis has exposed key fundamental euro-area spots of vulnerability: the union remains a region of low growth, accompanied by weak inflation dynamics, and is set to be haunted by the hesitant and uncoordinated policy response to the recent as well as past crises.”

“Looking one year ahead, consensus now seems to expect a pick-up in activity plus Italian debt and Brexit issues being solved, while we see a risk of premature fiscal and monetary tightening by end-2020. However, we do not see a level shift in either direction in EUR/USD over the next year and express this view by selling a 12M 40D strangle in the Danske FX Trading Portfolio, receiving a premium of 514 pips (indicative prices). The strategy is profitable if EUR/USD trades below 1.1729 or above 1.0225 at expiry, where strikes leave room for both a valuation reversal and EUR ‘credit issues’ resurfacing.”

Kathy Lien, BK Asset Management

“For the past few weeks, we’ve been talking about why the greenback rises on good news and bad because investors perceive the outlook for the rest of the world to be worse. This is one of the reasons why euro could test its 3 year low of 1.0636 versus the US dollar. While Europe slowly crawls out of the depths of COVID-19 shutdown, the region was the second major hotspot which means economic data will worsen more quickly. We’ve mostly seen February and March data such as this morning’s Eurozone industrial production numbers which showed a modest -0.1% decline in February – the April numbers will be ugly. European nations are also restarting business activity sooner than the US, which can be positive or negative for the currency depending upon whether they learn from Asia’s mistakes or see a second wave of cases.”

Andreas Steno Larsen, Nordea Markets

“Since tourism is basically the current most important redistribution mechanism within the Euro area as Spain, Portugal, Greece and Italy have almost 20% of GDP stemming from tourism on average (with a large portion of that coming from Northern European tourism), this is a major issue that the Eurogroup will eventually have to deal with, if we are right that borders will remain semi-closed throughout 2020. It has not yet turned into a EUR-issue, and we hope that it doesn’t, but it will require timely money transfers within the Euro area and usually the Eurogroup don’t take such decisions until there is a major leak. This is a reason to be skeptical on the scope of EUR/USD upside potential (and a reason to expect semi-wide intra-EUR spreads), even if all the USD printing eventually filters through to a weaker USD as we anticipate. This also means that you will probably find better currencies to short USD against than the EUR, once the weakening trend starts. AUD could be a decent guess (after having been on a positive CA trend for a while), since China may help Australia rebound – but it is simply too early to buy into that story.

Rabobank

“As the coronavirus crisis emerged in Europe, the EUR initially held its ground relatively well vs. the USD. Measured from the start of February the EUR is the fourth best performing G10 currency after the safe havens JPY, USD and CHF. The Eurozone has a large current account surplus and this probably afforded the EUR some protection potentially as EUR based funds unwound their holdings of risky assets. In contrast, on a one month view the EUR has performed poorly vs. the USD. The vulnerability of the single currency is also evident in the downtrend in EUR/CHF which this week hit a new four year low despite a recent step up in FX intervention by the SNB. We have argued for years that a utopic Eurozone would be the best solution to the SNB’s battles with CHF strength vs. the EUR. Current warnings about the future of the EU project suggest that the EUR could be on the brink of further downside pressure.

“President Macron’s warnings of a collapse of the EU unless it finds a way to share the costs of the coronavirus crisis with countries such as Italy are the latest reminder of the high stakes at play in Europe currently. The experience of the Eurozone debt crisis has provided a recent warning that if politicians are not judged favourably during a crisis, populism is likely to increase its foothold in Europe and this could have dangerous repercussions for the coherence of both the EU and potential EMU. Macron has recalled France’s “colossal’ error in demanding reparations from Germany after the first world war and the populist reaction that followed. EU leaders are due to hold a video conference on April 23 to discuss a way forward. The outcome of these talks could have a defining impact on Eurozone assets for years to come. Currently we are a forecasting a dip to EUR/USD 1.05 on a 3 month view, but politics will remain key for the outlook for the EUR.

Robin Wilkin, Lloyds Bank

“Prices have seen the pullback our intra-day studies warned of yesterday. We are now around the midst of current contracting ranges. While under 1.0990, risks remain for a deeper setback towards 1.0810-1.0750 again. Below there re-opens the risk of a return to test the 1.0635-1.0590 support. If prices can recover back through 1.0990, there is room for an extension towards 1.10.80 ahead of the 1.1170 previous reaction highs. Still no confirmation of 1.0635 at least being a medium-term low for a recovery back towards 1.14-1.15 region. A clear break of 1.0635-1.0590 risking a move down towards the 2017 lows in the 1.0340 region.”

Marc-André Fongern, Fongern Global Forex

“FX markets are probably expecting further action by the FED, so the USD is taking a break for the moment, copper prices are showing more signs of life and the price of gold is falling sharply. This week has been a mixture of hope and melancholy.”

Erik Bregar, Exchange Bank of Canada

“Its been a very choppy 24hrs for euro/dollar. Yesterdays mixed US data set gave the buyers enough reason to give up on their attempt at the 1.09 handle, and that began a quick move lower through the 1.0850s to the next chart support level in the 1.0820s. Broad USD buying flows, before and after the London close, exacerbated this move lower in EURUSD and we thought the news of lockdown extensions for the UK and New York created a mild risk-off tone. This negativity started to reverse during the NY afternoon after President Trump announced a major news conference at 6pmET to unveil economic re-opening guidelines, and after he said there may be a $2 trillion infrastructure package.

The STAT headline then saw EURUSD regain the 1.0850s in early Asia but it appears Chinas Q1 GDP got everybody in a bad mood again heading into Europe. The market is now trying to hold a bounce off the 1.0820s yet again this morning, and we think todays 10amET option expiries (1.9blnEUR between 1.0835 and 1.0850) will likely keep prices stuck around here.”

MUFG

“While we see reason for EUR to go higher further ahead (mutual debt issuance is likely; see Macron’s FT interview today), now is not yet the time to see the dollar weaken. Hence, with global risk fragile and potentially set to turn to more risk-off, we see prospects of the April low of 1.0769 being breached over the short-term. We expect oil-related currencies to come under renewed selling pressures during the second half of this month. In the G10 FX space, we expect USD/CAD to rise back towards last month’s highs at close to the 1.4500-level.”

Richard Perry, Hantec Markets

“We have been noting the increasingly corrective configuration developing on EUR/USD in the past couple of sessions. This took a step forward yesterday as a decisive break of the three week uptrend confirmed with a second consecutive bearish candle. We are now seeing lower highs and lower lows form as the dollar has begun to strengthen. This is reflected in the negative bias developing on daily momentum indicators, something that is also present on the hourly chart. Breaking the old uptrend and using the underside as a basis of resistance, the old pivot band between $1.0890/$1.0925 has become a basis of resistance. Rallies are now a chance to sell, and so reaction to this morning’s rebound will be key. A rally off yesterday’s low at $1.0815 is back towards the $1.0890 resistance area again. So, if the dollar bulls are now in the ascendancy this will be a barrier and a likely area for another lower high. With both daily and hourly momentum showing negative configuration now, we prefer to use rallies as a chance to sell. A decisive move clear below $1.0830 would open a test of support of the early April low around $1.0770.”

Recap: Euro Exchange Rates Benefit From Europe’s Falling Covid-19 Fatalities

The Euro (EUR) began this week strongly following a surge of optimism over Europe’s handling of the coronavirus following a fall in the number of fatalities in heavily hit nations like Italy and Spain. Tuesday saw the EUR/USD exchange rate to highs of $1.09.

A number of European countries, like Austria, also begun to ease to their nationwide lockdown measures and slowly start to rebuild their economies. As a result, the Euro edged higher due to hopes that some of the Eurozone’s economies could start to recover from the damage done by Covid-19.

Austria’s Chancellor Sebastian Kurz commented the country was now ‘on the right track’. However, Kurz also added:

‘We are now taking the first steps back to a new normality. But the crisis is far from over.’

The Euro’s gains were compromised on Wednesday, however, after French Finance Minister, Bruno Le Maire, said that France could see a growth contraction of up to -8%, which left many single currency investors concerned that the bloc’s economy could see a severe recession in the near-term.

Many countries within the Eurozone began to show signs that they would ease their lockdown measures further into the week. However, this caused some concern as some nations appeared to ignore the European Commission’s guidelines, highlighting fears of a lack of unity within the EU.

European Commission President Ursula von der Leyen however urged for clear communication across the bloc, saying:

‘A lack of co-ordination in lifting restrictive measures risks having negative effects for all member states and creating political friction.’

Thursday’s release of the Eurozone’s Industrial Production report for February provided a glimmer of hope for EUR traders, however, with the figure dipping to 0.1% and missing the estimate of a -0.2% contraction.

However, with the Eurozone’s industrial sector expected to see a larger downturn in March and April, this failed to buoy the EUR/USD exchange rate.

The EUR/USD exchange rate rose by around 0.1% on Friday, however, as Euro traders continued to celebrate the decreasing amount of Covid-19 fatalities in Europe.

US Dollar (USD) Benefits as Global Recession Fears Mount

The US Dollar (USD) fluctuated wildly last week, but however remained generally stronger against its peers as the ‘Greenback’ continued to reap its benefits as the major safe-haven currency.

However, with the US still struggling to see the end of its coronavirus crisis, with cases topping 555,000 and over 23,000 deaths, the US Dollar’s gains were prevented from any significant gains.

Some US Dollar traders were also becoming increasingly concerned about US President Donald Trump’s desire to reopen the economy as soon as possible, despite health experts warning about the dangers to public health and the economy should lockdown measures be significantly relaxed.

The ‘Greenback’ did, however, benefit from a return of market risk-off mood after the International Monetary Fund (IMF) warned of the worst economic downturn since the Great Depression.

Gita Gopinath, the IMF’s Chief Economist, commented:

‘It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago. ‘The Great Lockdown’, as one might call it, is projected to shrink global growth dramatically.’

Thursday’s release of the US Initial Jobless Claims, which rose by 5,245,000 in April, leaving many ‘Greenback’ investors fearing how much higher American unemployment could rise in the weeks to come.

However, the USD/EUR exchange rate remained markedly steady towards the end of the week as the ‘Greenback’ continued to absorb safe-haven demand.

Forecast: Could the Euro-Dollar Plummet as Germany’s Manufacturing PMI Suffers?

The US Dollar (USD) will likely fair well this week, with investors seeking out safe-haven currencies as uncertainty rise over the health of the global economy.

However, if Europe’s coronavirus cases continue to dip, and the US fatalities continue to rise, we could see the US Dollar suffer from a sell-off in favour of the Euro – the ‘Greenback’s main competitor – as Europe continues to recover its economy ahead of America.

Euro investors, meanwhile, will be awaiting Tuesday’s release of Germany’s ZEW Survey of Economic Sentiment for April. With the Eurozone’s powerhouse economy’s economic morale expected to plummet, we could see the Euro follow suit.

The ‘Greenback’ could also fall if Thursday’s publication of the US Initial Jobless Claims report shows yet more unemployment.

Thursday will also see the release of the flash US Markit Services and Manufacturing PMI. Any signs of improvement in April would provide a boost for the US Dollar.

Thursday’s publication of Europe’s flash German Markit Manufacturing PMI will also remain in focus this week. However, as the Eurozone’s largest economy’s biggest sector is likely to plummet deeper into contraction, we are likely to see the EUR/USD exchange rate suffer as a result.