Fundamental Forecast for Euro

Just six months ago, the euro was prized for its growth outlook, interest rate forecasts and its status as the primary alternative to the US dollar (a currency that has fallen from grace since the financial crisis). Today, we have a very different picture of the same currency: there is little sign of a rate hike from the ECB on the horizon; Growth is very uneven across the Euro Zone’s various member economies; and the very stability of the European Monetary Union has been thrown into doubt. This is perhaps the most dramatic shift of any of the major currencies; and yet this dire fundamental backdrop is not fully appreciated. In the week ahead, the market will keep its focus on the Greece to see whether EU officials can rescue an economy that is quickly fading without evoking severe side effects along the way.

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