Published on 11/13/2024 at 4:46 p.m.
(Boursier.com) — The euro is further widening its losses against the dollar! The single currency dropped more than 0.5% this Wednesday around $1.057 between banks, the lowest since November 2023. The American consumer price index for the month of October did not reserve any unpleasant surprises, reinforcing expectations of another quarter-point rate cut from the Fed next month. But the key positions assigned by Donald Trump to his loyalists for his next administration are fueling concerns about a surge in inflation linked to the planned sharp increases in customs tariffs, in particular vis-à-vis China.
The red tide in the US presidential election last week led to a big turnaround among currency strategists. While most had raised their forecasts on the single currency in recent months, they now say that a return to parity cannot be ruled out. “This is the worst scenario we can think of for the euro,” Mark McCormick, global head of foreign exchange strategy at TD Securities, told ‘Bloomberg’, who expects the euro to fall to 1, 03$ by the time Trump takes office in January. Parity “is absolutely at stake” after that, according to him. The scale of the Republican victory means there is a greater chance of seeing the billionaire’s tariff policy plans implemented. This “red wave scenario” increases the risks of a dollar at parity with the euro, underlines Mr. McCormick.
Deutsche Bank goes even further. “If Trump’s agenda is implemented forcefully and quickly without a countervailing policy response from Europe or China, we could see the euro-dollar fall through the parity to 0.95 cents or even to underneath,” said George Saravelos, global head of currency research at DB. Overall, analysts tracked by ‘Bloomberg’ now forecast a median euro price of $1.08 for next year, down sharply from the pre-election level of $1.13.
