Dubai: The euro may plunge further this week on cheap money policy stance taken by the European Central Bank and as deflationary fears persists.
The euro ended 0.26 per cent weaker at 1.1291 against the dollar on Friday. The euro is still down more than 8 cents against the dollar since the start of this year, post the aggressive selling linked to the quantitative easing programme the European Central Bank unveiled on January 22.
“The euro would be under pressure and may see more downside to be on par with dollar with quantitative easing and deflationary risks,” said Pradeep Unni, senior relationship manager with Richcomm Global Services.
Greece is expected to repay its debts to the European Central Bank and the International Monetary Fund and reach a deal “soon” with the euro-area nations that funded most of the country’s financial rescue, according to Prime Minister Alexi Tsipras.
“The fear of a potential exit of Greece from the Eurozone is over after comments by the new Greece government,” said Unni.
Meanwhile, Morgan Stanley cut its estimate in which the euro will finish 2015 to $1.05 from $1.12. Bank of America Merrill Lynch sees the euro now falling to $1.10, from $1.20 in an earlier forecast, while HSBC Holdings experts cut their year-end expectation to $1.09 from $1.15.