Euro fell to a two-year low

Euro fell to $1.0929 this week. This is the minimum since May 2017. Analysts believe that the demand for the dollar will continue to grow in the coming months, while the euro may become even cheaper.
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The euro fell to a multi-month low against the dollar after the release of weak eurozone statistics. It reinforced investor expectations for a further cut in rates in Europe.
The meeting of the ECB (European Central Bank) will be held next week, September 12. Markets expect that the Central Bank of Europe lowers its base rate by 20 basis points. Now it is -0.4%.
Market participants estimate the probability of a rate cut by 80%. The Central Bank may lower interest rates as economic growth slows, and Germany’s GDP goes negative for the second time in a year.
The depreciation of the euro also contributed to fears of a slowdown in global economic growth due to a trade conflict between the U.S. and China. September 1, the United States increased duties on Chinese goods for $300 billion by 15%. In response, China imposed 10% duties on the U.S. goods worth $75 billion.
Experts believe that a trade agreement between the countries will not be concluded until the U.S. presidential election in 2020. As a result, the bank lowered the forecast for U.S. GDP growth in the fourth quarter of 2019 by 0.2%, to 1.8%. The U.S. faces a recession over the trade war with China, analysts say.
Analysts also expect further depreciation of the euro and a stronger dollar. Due to increased trade differences between Washington and Beijing, demand for the dollar has grown. Market participants see it as a safe investment.
In the next three months, some analysts expect the euro to strengthen to $1.12, while the other half expect the euro to drop to $1.08 per euro in three months.
The information above cannot be considered as investment advice and past results do not indicate future performance.
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