Sina Finance and Economics on the 27th, as the end of 2019 drew near, the euro, which has been in the doldrums for two years, finally ushered in much-needed optimism.
According to the median forecast of analysts surveyed by Bloomberg, the euro is expected to rise more than 4% against the dollar in 2020, making it the world's best-performing currency. The improved global economic outlook and the easing of political tensions are expected to be positive.
Morgan StanleyOne of the first transactions in 2020 is to long the euro.UBSAnalysts at institutions such as Wealth Management and Credit Agricole share the same view. Options markets showed increased confidence in the euro and risk appetite picked up amid signs of easing international trade tensions, with the euro hitting an one-week high on Friday.
"the euro / dollar is particularly sensitive to improved global economic growth," said Stephen Innes, a strategist at Axitrader Limited. "as trade optimism has a positive impact on global growth, trend momentum may start to push up the euro."
The euro climbed to $1.1150 on Friday, its highest level since Dec. 18. The euro / dollar is expected to reach $1.16 by the end of 2020, according to a Bloomberg survey. After falling 4.5 per cent in 2018, it is down about 3 per cent this year.
An one-year risk reversal showed a call premium of 36 basis points, close to a 20-month high of 43 reached on December 13. One-month risk reversed to 20 basis points, a period that covered the ECB's policy decision on January 23.
Markets had expected the euro to rise by about 5% this year, but the euro fell against the unexpectedly strong dollar, taking the market by surprise. Fears that international trade conflicts could spread to Europe, Brexit and a weak global economic outlook have all put pressure on the euro. Jens Peter Sorensen, chief analyst at Dansk Bank, expects EURUSD to move "slowly" towards $1.15 by the end of 2020, wary of over-optimism as the ECB maintains its policy easing stance.
"We have a good view of the euro and are expected to fluctuate in a range against the dollar in the first quarter," Sorensen said. Despite the first step towards a trade agreement and an orderly Brexit and signs of stabilisation in the global economy, this fragile recovery still requires a lot of stimulus. Especially in Europe. "