The Euro versus the US dollar is down 8% since September 2024, to a level of 1.02, close to parity.
Some predict the Euro could reach parity by the end of January.
Drivers of the route to parity:
Political uncertainty in Germany and France.
Political uncertainty in Germany and France.
Threat of US tariffs making exports more expensive.
Threat of US tariffs making exports more expensive.
Severe uncertainty in bonds and the government budget in Europe's neighbor the UK.
Severe uncertainty in bonds and the government budget in Europe's neighbor the UK.
Low interest rates making yields less attractive versus the UK and US.
Low interest rates making yields less attractive versus the UK and US.
What can reverse this path?
US tariffs being more bark than bite.
US tariffs being more bark than bite.
Positive election outcomes in Germany and France.
Positive election outcomes in Germany and France.
Unchanged interest rates.
Unchanged interest rates.
An end to the Russia Ukraine conflict.
An end to the Russia Ukraine conflict.
An upturn in economic data.
An upturn in economic data.
Key data to watch
Purchasing Managers Indexes (PMIs).
Purchasing Managers Indexes (PMIs).
Recent PMIs have been good. If they continue, perhaps some hope.
Recent PMIs have been good. If they continue, perhaps some hope.
Next PMI is January 20, 2024, the day of US Presidential inauguration.
Next PMI is January 20, 2024, the day of US Presidential inauguration.
More PMIs will come out towards the end of January and should be watched.
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