Analysts from investment bank Morgan Stanley predict that the eurozone will rally in 2020. They cited the pickup in European economic growth, which could start outperforming the US.
Strategist Hans Redeker said the euro-to-dollar would rally with the rebound in European equity inflows. There would also be a more benign EU political backdrop to boost the EURUSD pair.
On October 31, the pair slipped to 1.0825, which was a multi-year low. After that, the pair started climbing up.
But even though the euro strengthens, it still needs to find more upside impetus.
The growth in the eurozone has been moderate this year. Brexit uncertainty, a slowdown in the German manufacturing sector, and overseas trade war risks all weighed on the region’s growth.
But third-quarter figures hinted that the economy might have already bottomed. As a result, economists are predicting a reversal.
Outside Eurozone, FX Markets Look at Trade News
Meanwhile, the US dollar weakened following the release of the Federal Reserve Bank’s meeting minutes.
At the same time, trade tensions flared up after reports said US President Donald Trump might sign a bill that would support Hong Kong protests.
According to a spokesman for the Chinese foreign ministry, the decision was a “blatant interference” in Chinese internal affairs.
The spokesman then went further and threatened “negative consequences” if the US persisted.
Meanwhile, Fed meeting minutes showed that officials agreed the policy “likely” would remain” as it was. If the incoming economic data didn’t warrant a reassessment of the outlook, there would be no change in policy.
The US dollar index was flat at 97.785. Against the Japanese yen, the dollar did not move much at 108.58. Against the Chinese yuan, the greenback inched up 0.1% to trade at 7.0394.
The Australian dollar lost 0.1% to 0.6797 against the US counterpart. Similarly, the New Zealand dollar dropped 0.1% to 0.6413 against the US dollar.