Additional easing by the ECB in June has failed to generate further downward pressure on the euro. Indeed, the euro has strengthened since the Governing Council met last month. However, while the ECB decided to keep policy on hold at its latest meeting on Thursday, we suspect that it will not be too long before it eases further and implements some form of quantitative easing that would weigh on the single currency. What’s more, it is likely to be a very long time before interest rates rise in the euro-zone. By contrast, we suspect that the pace of monetary tightening in the US will be faster than investors appear to be anticipating. The upshot is that we forecast the euro to fall against the US dollar this year and next. Our end-2014 and end-2015 forecasts are $1.30 and $1.25, respectively, down from a current level of around $1.36.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services