Forecasts for the euro change all the time, affected by news events and relative sentiment towards the overall Eurozone economy. This continually updated article reviews EUR bank forecasts and popular cross-rate trends.
EUR in the markets
The Euro spent 2019 on a downwards trajectory, starting the year with highs at US1.1550 but then slid all year until October where it bottomed out at US$1.09 on Oct 1, close to long-term lows. Since then it has climbed back up towards the average rate for the year of US1.12, perhaps due to the less uncertainty around Brexit.
Euro sentiment dipped in mid-June after the ECB, like other major central banks of the world, ramped up its dovish rhetoric. It said that there was “considerable room” for further quantitative easing and that it would consider negative interest rates. Ordinarily, this would spark an extended euro decline but since other major currencies are also wrestling with easier central bank policies, euro depreciation may be contained.
In spite of Brexit, a slowdown in economic growth, Italian risks and persistently weak inflation — an important measure of inflation expectations fell in June to a record low — the euro did fantastically well against the Australian dollar, New Zealand dollar.
In May, Deutsche Bank predicted more euro depreciation. It said EUR/USD could break $1.10 over the summer, with key drivers being the US-China trade war, Brexit and Italian risks. Per a recent Reuters poll of analysts, EUR/USD will be at $1.17 in mid-2020.
Also in May, Lloyds revised its year-end EUR/GBP forecast to £0.85, though that could be much higher if Theresa May is replaced as UK PM by a hardline Brexiteer.
On Brexit, Nordea Research has said that “no deal” will have the euro buying £0.95, that a Norway-type Brexit (“Norway plus”) or permanent customs union will lead to £0.81-0.83, and a deal akin to the current withdrawal agreement should see £0.83-0.84.
EUR/AUD could be a lot higher by year-end, at rates between A$1.67 and A$1.785, based on implied forecasts from Danske Bank and Westpac.
You can also read our full Foreign Exchange Guide to the Eurozone.
EUR/USD – Historical Rates
|1 Day||-0.1%||1.1097||20 Jan 2020|
|7 Day||-0.4%||1.1128||14 Jan 2020|
|30 Day||+0.1%||1.1080||22 Dec 2019|
|3 Month||-0.4%||1.1133||23 Oct 2019|
|1 Year||-2.5%||1.1369||21 Jan 2019|
|5 Year||-2.4%||1.1361||22 Jan 2015|
|10 Year||-21.6%||1.4133||23 Jan 2010|
*For period to 21-Jan 21UTC when EUR/USD was 1.1086
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