Waiting for the EUR/USD parity
There are few doubts in the financial community that within this year the Eur/Usd pair will reach the parity.
Well, I consider this event one of the most positive for Europe’s economy and I think the Euro strength is one of the major causes why Europe is in this economic and political situation. There are no economic reasons, except the Carry Trade, why the Euro has to be so strong. The euro-zone has a commercial surplus, but has also many negative economic indicators.
Some analysts try to explain the strength of the Euro with the weakness of the dollar, but also this point of view is not ok for me. In the past five years, the US economy has always been stronger than the Euro-Zone. If we compare the major economic indicators of the two economic areas we’ll have few doubts about that.
So the only reason remains the Carry Trade. The difference on the interest rates explains to us much of the reason why we have seen a so strong Euro in the past years. In the last year this difference there’s no more. In this new situation, how low can the Euro go?
Back in year 2000 we saw the Eur/Usd pair exchanging at 0.8200 while the German economy was traveling at 3 %, the Italian jobless rate was around 10 % and the Greece economy was growing much faster.
Now in year 2015 when every economic indicator of the major countries of the euro-zone are much worse and the interest rates in the euro-zone are lower than in the US, why the Eur/Usd pair must be at 1.1100 ?
This seems to be a big enigma for many investors. That’s why nobody must have any doubts about the Eur/Usd parity.