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EUR/USD Exchange Rate Forecast: Will Euro Rise on Strong Start to 2018?

European Central Bank

The Euro has a chance to rally against the US Dollar in the coming year, if forecasts prove accurate and Eurozone economic growth continues unabated.

Surge in Eurozone Growth could Boost EUR/USD Exchange Rate

The Euro to US Dollar (EUR/USD) exchange rate could pick up in the coming year, if the Eurozone’s previous growth spurt continues uninterrupted.

The Financial Times has recently polled a range of influential economists about their 2018 Eurozone outlook, with a number of experts taking a positive stance.

Carsten Brezeski, Chief Economist at ING, has stated that;

‘2017 was almost too good to be true for the Eurozone and many Eurozone policymakers would probably like it to never stop.

But there is good news: the recovery will continue. Thanks to the European Central Bank’s (ECB) QE and low interest rates, domestic demand and particularly investments should gain more momentum in 2018’.

Another supportive voice has come from Fathom Consulting, an economic research company. Speaking for the company, Euro Area Economist Andrew Harris said;

‘Fathom foresees the Euro area cyclical upswing continuing in 2018.

In the short term, the currency bloc’s fundamentals (loose central bank policy, buoyant economic sentiment and a strong external growth environment) are supportive of growth’.

Looking at the other side of the equation, however, Harris has added that;

‘However, Fathom remains pessimistic on the long-term outlook for the Euro area.

We remain concerned about [high] levels of public and private debt and believe prolonged ultra-low interest rates have also led to zombie firms which weaken productivity growth.

Fathom believes that these factors, coupled with the challenges from demographic changes, will ultimately weigh on growth in the future’.

2018 USD/EUR Outlook: Exchange Rate Losses Possible if New Year brings Slow Start

The US Dollar has lost ground to the Euro today and could face further difficulties when the New Year begins next week.

President Donald Trump will be in the spotlight in the first week of January, as his one-year anniversary approaches on January 20th.

Trump’s first year in office was marked with high controversy and a lack of real policy change.

This latter problem was partly down to narrow majorities in the House of Representatives and the Senate, which saw a number of Republican plans blocked.

Among these was the plan to ‘repeal and replace’ the Affordable Care Act, which saw a high profile failure after repeated attempts to pass the measures.

If the Trump administration seems to repeating last year’s mistakes in the New Year, the US Dollar to Euro exchange rate could fall significantly.