Exchange Rate in Eurozone
Eurozone - Exchange Rate
Euro lingers around two-year lows amid political noise and divergent momentum
The euro continued to languish near two-year lows in recent weeks, ending 24 May at USD 1.12 per EUR, barely unchanged from the same day in April. May’s result represented a 2.0% depreciation from the start of the year and a 4.4% decline from the same day in May 2018. The uncertain external environment has weighed on the euro and the trade-exposed Eurozone economy; meanwhile, the dollar, which is seen as a safe-haven currency, has gained ground. In addition, a dovish ECB and moderate economic momentum has kept the currency at low levels, while activity in the U.S. has generally held up well so far.
Politics at home has also played a role amid noise surrounding May’s European elections, Brexit and some national concerns. The European parliamentary elections confirmed the expected fragmentation and polarization in the union as populist parties increased their presence in the Parliament, which could make consensus-building and passing legislation tougher. That said, while the Parliament has a role in shaping EU policy, agenda-setting powers reside with the heads of states. Moreover, the vote exposed cracks in some members’ governments, leading to snap elections in Greece and increasing uncertainty over how much longer Italy’s unlikely coalition government can survive.
Looking ahead, our panel sees the euro regaining modest lost ground in the second half of the year, before strengthening in 2020. Commenting on ING’s outlook for the euro, chief economist Peter Vanden Houte, elaborates:
“Despite the slightly better than expected 1Q19 GDP figure, Euro area growth concerns remain and the market will be wary of the ECB’s meeting in June where details of TLTRO III will be announced, cementing low rates. Additionally, the wild card of European elections and Washington’s threat to impose tariffs on auto imports hang over the Euro this summer. […]
We see no reason to change our 1.10 EUR/USD forecast for end June 19. We have, though, recently scaled back the expected EUR/USD recovery into 2020/21, but importantly keep the view that widening US deficits and the mature business cycle means that the dollar peaks this year.”
EUR/USD Exchange Rate Forecast
FocusEconomics Consensus Forecast panelists see the currency pair trading at USD 1.16 per EUR at the end of 2019 and USD 1.20 per EUR at the end of 2020.
Eurozone - Exchange Rate Data
|Exchange Rate (vs EUR)||1.21||1.09||1.05||1.20||1.14|
5 years of economic forecasts for more than 30 economic indicators.
Eurozone Exchange Rate Chart
Source: Thomson Reuters.
|Exchange Rate||1.12||0.65 %||Dec 31|
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April 1, 2020
Sentiment in the Eurozone nosedived in March due to the blow of coronavirus, plunging to 94.5 points from February’s 103.4 points.
April 1, 2020
Harmonized inflation fell to 0.7% in March from February’s 1.2%, according to a flash estimate released by Eurostat on 31 March.
April 1, 2020
Labor market conditions in the common currency bloc strengthened in February, ahead of an inevitable worsening due to the pandemic, according to data released by Eurostat.
March 24, 2020
The Flash Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, nosedived from 51.6 in February to 31.4 in March, marking the worst result since data was first collected in July 1998—including the lows during the global financial crisis.
Eurozone: ECB to buy over EUR 1 trillion of Eurozone debt this year to counteract coronavirus fallout
March 19, 2020
On 18 March, at an extraordinary night meeting after borrowing costs for Southern European countries had jumped on mounting coronavirus (Covid-19) concerns, the European Central Bank (ECB) unexpectedly decided to step up its efforts to combat the economic and financial shockwaves currently shaking the Euro area.