Forecast euro dollar for 2018 and 2019

Euro dollar forecast for 2018 and 2019

The  Department of Analysis of Bankinter  points out in its  Strategy Report Second Quarter 2018  its  forecast for euro dollar 2018 and 2019.

Euro dollar forecast 2018 and 2019

Mantenermos our estimated 1.17 / 1.27 US dollars for the year 2018 range .

In the year 2019, we estimate that the dollar will weaken so we maintain our estimated range for the year 2019 at 1.20 / $ 1.30 .

Forecast analysis Eurodollar

After a strong appreciation during the last quarter of 2017 and the beginning of 2018, the euro has stabilized in recent weeks in a very close range to $ 1.23, without a rate slightly faster expansion in the US or an increase in interest rates by the Fed have been enough for the dollar to regain ground factors. In the coming months, we believe that a balance of forces between the two currencies will continue , based on the following factors:

  1. The political environment continues to improve in Europe . The coalition agreement in Germany between the CDU and the SPD will allow Merkel continue to rule in Spain the economic impact of the political tension in Catalonia seems modest and Italy does not seem to be altered even though the elections will not allow the formation of easy alliances. In short, this favorable political context is compensating for a growth rate that is slightly higher than in the US in 2018.
  2. Central banks.  The euro has remained appreciated after rising rates Fed to 1.50% / 1.75%, because the Fed maintains its perspective two additional rate increases. The fact that these rate increases are already discounted in Europe and improving the economy leading to the European Central Bank to end its asset purchase program at the end of 2018 also help to keep the euro supported.

These factors will continue to act as a counterweight and prevent the dollar recovers ground , despite the rise in IRR T-Note and repatriation of capital to the US by the tax reform could spur demand for dollars. Therefore,  we maintain our estimate 1.17 / 1.27 US dollars for the year 2018 range.

In the year  2019 , we estimate that the dollar will weaken. The  tax reform Donald Trump will  boost consumption and investment , but also cause an increase in public deficit to levels above 4% of GDP and public debt rise according to estimates by the Congressional Budget Office. This  budgetary imbalance  will penalize the dollar, so  we maintain our estimated range for the year 2019 at 1.20 / 1.30 US dollars.

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