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Euro Could End Winning Streak

ByBenzinga
AuthorBenzinga
Published 08/26/2013, 10:11 AM
Updated 05/14/2017, 06:45 AM

The euro traded at 1.3368 at 8:36 GMT on Monday morning as investors prepared for a busy week of economic data from the US and Europe. The common currency has been climbing to new highs recently as the bloc's economic recovery gains momentum and economic indicators improve.

A Bloomberg survey of 26 economists predicted that economic confidence in the region likely rose to 93.8 in August from 92.5 the previous month. The estimate added to optimism that the eurozone will be able to maintain its long awaited recovery.

Despite improving data, many see the euro snapping in the coming weeks as the dollar improves. Although the eurozone was able to expand in the second quarter this year, most estimate that the region's GDP will contract by 0.6 percent for the year as a whole. This is a stark contrast to predictions about the US' GDP, which is forecast to grow 1.6 percent.

The US Federal reserve is also planning to tighten up its fiscal policies this year by tapering its current stimulus and allowing the US economy to stand on its own. By contrast, the European Central Bank has pledged to keep economic policy accommodative and leave interest rates at a record low 0.5 percent.

According to Bloomberg, the euro zone's modest recovery will not be enough to boost the currency against the dollar's strength over the next few months. Mizuho Securities sees the common currency sinking to $1.30 over the course of the next two months; while a Bloomberg survey of 60 analysts showed the euro down to $1.27 by the end of the year.

By Laura Brodbeck

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