Ahead of the ECB meeting this month, a number of analysts predict the Euro defeat against other currencies. They expect the EUR/USD to touch 1.15 in some instances.

Rate projection has became a favorite lead among forex traders nowadays. Ahead of European Central Bank meeting in January 22nd, a number of analysts share their prediction on the Euro defeat against other currencies, and expect EURUSD to touch 1.15 in some instances.

EURUSD

EURUSD 1.15

A Bloomberg survey on 30 analysts reveals expectation for the Euro to slide as low as 1.15 by the end of 2016. Netherland bank ING Groep NV that has became one of the most accurate forecasters in 2014, even predicted Euro slide to 1 Dollar. ING expected ECB measures in reigniting Euro area economy and avoid deflation to depress exchange rates. Investors will stay away from the Euro as ECB tries to loosen monetary purse even further. The perspective is certainly stand in a far distance compared to US The Fed that is expected to make Dollar even more attractive by hiking rates.

Apart from being pressured by cheaper oil and Greek drama, Euro also burdened by deflation projection. Analysts got another reason to be more bearish after last week report revealed that December inflation in the area fell to -0.2%, a 2009 record low.

InflasiEurozone Inflation Figures 2009-2014

This condition became additional reason for ECB president, Mario Draghi, to go forth with sovereign bonds buying in the frame of Quantitative Easing.

The QE plan turned even more widely talked this week as reports that ECB is discussing plans to buy as much as 500 billion Euros of quality government bonds. Inside tip received by Bloomberg disclosed that a number of QE proposal is being examined by the ECB, including the quality bonds buying. While another report by Reuters mentioned that ECB is discussing three QE designs. The final choice is not yet out, but the rumour makes for a nice spotlight as ECB January 22nd meeting draws near.

 

Hike Sooner or Later?

Meanwhile, data compiled by Bloomberg showed that 58% likelihood for US the Fed to hike rates bu September 2015. Several analysts even more hawkish than that. Credit Suisse said to the same media that the Fed will probably raise rates in June, and hike three more times in the next four meetings. With that expectation, Credit Suisse expect the Euro to fall to 1.15 Dollar by the end of 1.15.

However, with 58% likelihood, there left quite a big chance for the Fed to disappoin the market. US NFP report last week revealed weely wages drop from 2% in November to -2% in December 2014. Lowe-than-expected wages worsen expectations on US inflation ahead of its release later this week. Consequently, the market became hesitant and sentiment on the US Dollar weakened for some time when market opened on Monday. Charles Evans from The Fed Chicago even suggested for rate hike to be done in 2016 instead of 2015.

Nevertheless, there are those that stay sanguine. Several estimates quoted half-time works during winter as the reason why weekly wages drop, and therefore it is simply temporary. Winter has often been the cause of anomalies in the past that later proved to simply be exception rather than the rule. This is why the market is largely still bearish on the EURUSD.

Which estimate is the right one? the future is hard to see. But there is one sure thing: the effect of disparity between Euro and Dollar has caused sell EURUSD to become favorite strategy among bankers this year. The Fed might fail in raising rates in mid-2015, but Eurozone circumstances is as such that recovery is not likely to happen any time soon. That is how Euro became absolute bearish target, regardless of till which point.