The Euro Rose Slightly Against The US Dollar And Then Declined.

At present, analysts who agree that the euro will continue to fall will talk about the weakness of the euro and believe that the euro may fall to or even lower than the US dollar parity.

A few weeks ago, this view was mostly regarded by market investors as an Arabian tale. So what's wrong with the euro?

On Wednesday (January 7th), the euro fell to a nine year low of about 0.5% to 1.18 against the US dollar. Data released earlier showed that the euro area inflation rate fell for the first time since 2009, raising the market's expectation of the European Central Bank's rapid launch of the QE purchase plan.

Against the backdrop of QE's continued fermentation, the euro has fallen by 2.4% against the US dollar since the new year.

Last time, the euro fell below parity against the US dollar, or in November 2002. Before that, the euro fell to 1 against the US dollar for the first time at the end of 1999, and its lowest point fell to 0.84 at 2000.

In recent years, however, the euro has maintained parity against the US dollar.

In most trading periods in 2014, the euro traded above 1.30 against the US dollar.

But now, it is no longer believable that the euro will fall to 1 against the US dollar.

Mark Chandler (Marc Chandler), director of foreign exchange strategy at Brown Harriman Haleman (Brown Brothers Harriman), said that before the next general election in December 2016, the US dollar would have a strong chance of further strengthening against the euro.

Because in the meantime, the Fed will raise interest rates sooner or later, and the ECB will ease sooner or later, and the euro is expected to steadily lower against the US dollar.

Once the euro central bank does declare QE, the euro's downtrend may ease temporarily, but the trend will not change.

The market is expected that the ECB will make some comments on sovereign bond purchases after the January 22nd policy meeting, but the actual purchase items are going on later.

In the case of QE in the US, investors may buy rumors and sell facts.

When the Federal Reserve implemented QE, investors bought dollars and sold treasury bonds.

The same situation is expected in Europe.

Amherst Pierpont global analyst Robert Sinche estimates that the euro's lowest target against the US dollar is 1.10 this year. It does not believe that it will fall to parity, and that factors such as the federal interest rate raised to 2% in the middle of 2016 will be needed to lower the euro against the dollar.

With the acceleration of the US economy, the euro zone has been in deep mire of deflation, and the depressed economic growth environment has promoted the market's low expectations for the euro.

at present

The interest rate level is very low, and the German bond yields have fallen remarkably. In recent days, the yield of the five - year treasury bonds has dropped to negative for the first time in history.

Since the beginning of the year,

Treasury bonds bought in a bid to lower the yield of US Treasury bonds. The yield on us 10 - year treasury bonds rose slightly on Wednesday, but still below 2%.

I am eager to say yes.

Over consideration.

Based on the current interest rate differentials, the euro should be traded at 1.25 against the US dollar, but at present, 1.18,1.25 is probably the upper limit of the euro to us dollar trading range this year.

Chandler was even more pessimistic. He said the SNB could be the only buyer of the euro.

Last month, the Swiss central bank intervened in the foreign exchange market to protect the euro against the Swiss Franc ceiling.

Even in the best performing period, the European economy is expected to grow by only 2%.

The fall of the euro, the fall in interest rates and the fall in oil prices helped to build the European economy.

At the same time, the U.S. economy has boosted the dollar.

Just as the former euro's exchange rate has gone too far in the first half of 2014, the euro has also weakened rapidly in the near future, and the performance of the euro against the US dollar will remain more dependent on the US economic performance thereafter.