EUR - Recent Performance
The euro was the best performing G10 in 2017 and was broadly stable in early 2018.
In the seven-week period between January 1st and February 15th (the time of this report), EUR/USD threatened 1.25 multiple times – a level not seen since 2014 – but appears to have met resistance at this level. It should be said that much of EUR/USD's recent rally is a result of broad US dollar weakness, rather than of broad euro strength.
Entering 2018, forecasts for EUR/USD ranged between 1.15 and 1.3. A more recent judgement on the pair came in February from Jens Nordvig, founder of Exante Data, who said that “dips [in EUR/USD] should be used to add to long exposure.” Nordvig declined from giving any precise upside targets.
Against sterling, the euro is little changed since the summer of last year. A EUR/GBP rate of 0.8855 in mid-February was more or less identical to that in mid-September, five months earlier.
Entering 2018, Danske Bank forecast EUR/GBP at 0.86 at year-end, while UBS forecast a much higher rate of 0.95.
By mid-February, the euro was marginally down on the year against the yen, at rates in the high 132s.
Significant bullish news for the euro in early 2018 came from Germany, with Angela Merkel’s CDU-CSU party bloc achieving a breakthrough in coalition talks with the Social Democrats, which reduced political uncertainty in Europe’s largest economy.