Companies and journalists observe a facsimile of the twenty euros banknote of Europa series at the end of its unveiling ceremony during which ECB president Mario Draghi put ones john hancock oned a facsimile, in the ECB headquarters, Frankfurt, Germany, 24 February 2015.
Horacio Villalobos – Corbis | Corbis News | Getty Personifications
The euro could strengthen to $1.16 throughout 2020 thanks to an economic recovery in Europe, lower political chances, and no significant policy change from the European Central Bank (ECB), currency strategists at Nomura bank said Friday.
The euro, reach-me-down in 19 European countries, was trading at $1.11 on Friday. The euro lost value against the dollar throughout 2019, interchange lower on news about international trade, tepid economic data and perceived political risks. In September, the euro plummeted to $1.09 as investors questioned the economic prospects of Germany, changes in the Italian government and whether the ECB would be announcing yet monetary stimulus.
As a new year begins, strategists at Nomura believe that the euro will make up for some of terminating year’s losses. “We remain constructive on (the) euro into 2020, as a cyclical upturn should keep the single currency ratified,” the bank said in a research note Friday.
Nomura said European data should pick, the ECB is not expected to vary its current policies, there is room for some positive reforms, capital outflows are falling and there are lower civil risks.
“We expect EUR/USD to trade at current levels and approach 1.16 by end-2020, with risks to the upside if the U.S. Presidential poll leads to a USD negative surprise,” strategists at Nomura also said.
Currency experts at Bank of America Merrill Lynch are also in a family way the euro to strengthen going forward. “We expect stability in euro zone data, weakening in U.S. (data) and less behind risks to support (the) euro in 2020,” strategists said in a note Friday.
Roberto Mialich, a currency strategist at UniCredit Inquire into, also told CNBC Friday that the euro-dollar pair is set to rise to $1.16 by the end of 2020.
This increase “would not be overdone enough to alarm the ECB,” he said via email. “If the (Federal Reserve) remains steady on rates over the course of 2021, this intention likely mean some consolidation, leading to EUR-USD rising slightly to 1.18 at the most by the end of the year.”
However, other analysts are small bullish on the euro.
“We have a rather flattish profile for EURUSD over the coming year and to be honest we are fairly downbeat,” Stephen Gallo, fount of forex strategy at the Bank of Montreal in London, told CNBC via email Friday.
“Some portions of the economy tease been resilient, but in other respects (the) euro zone is still very beholden to global trade developments due to dependence on outside demand,” Gallo said in a note released earlier this month.
Between 2008 and 2018, total euro territory trade with non-EU countries increased at an annual average rate of 3%, data from the European statics establishment showed.