Currency strategists are ripping up forecasts for the euro in the wake of the US election and coming up with a new call: a slide toward parity with the dollar. At least 10 banks—including Barclays Plc, Deutsche Bank AG and Nomura International Plc.
Currency strategists are ripping up forecasts for the euro in the wake of the US election and coming up with a new call: a slide toward parity with the dollar.
The changing landscape in the currency market follows anticipation that global trade restrictions could become a key pillar of Trump’s economic policy when he returns to the White House next year. That’s been prompting investors to dump the euro—it’s already down nearly 3 percent since his victory to near this year’s low—as tariffs would hurt Europe’s export industries at a time of political uncertainty in its major economies.
Others now see a heavy hit for the common currency. Mizuho International Plc expects $1.01 by March, while ING Groep NV forecasts it will reach that level by early 2026. The Dutch bank was among those issuing the biggest downgrade—it previously saw $1.10. Bets for a weaker euro by hedge funds and other leveraged investors were already hovering around their biggest in around three years in the run-up to last week’s vote, according to the latest Commodity Futures Trading Commission data, and positions are likely to have ballooned since then.
The economic hit from tariffs to Europe would also mean the European Central Bank is likely to cut interest rates faster than the Federal Reserve in the US, where pro-growth policies could boost inflation and slow easing.
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