The euro could strengthen to $1.16 in 2020 thanks to an economic recovery in Europe, lower political risks, and no significant policy change from the ECB, currency strategists at Nomura bank said Friday.
The euro, used in 19 European countries, was trading at $1.11 on Friday. The euro lost value against the dollar throughout 2019, trading lower on news about international trade, tepid economic data and perceived political risks. In September, the euro dropped to $1.09 as investors questioned the economic prospects of Germany, changes in the Italian government and whether the ECB would be announcing further monetary stimulus.
Nomura said European data should pick, the ECB is not expected to alter its current policies, there is room for some positive reforms, capital outflows are falling and there are lower political risks. Currency experts at Bank of America Merrill Lynch are also expecting the euro to strengthen going forward. "We expect stability in euro zone data, weakening in U.S. and less tail risks to support euro in 2020," strategists said in a note Friday."We have a rather flattish profile for EURUSD over the coming year and to be honest we are fairly downbeat," Stephen Gallo, head of forex strategy at the Bank of Montreal in London, told CNBC via email Friday.
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