Many financial analysts believe that the euro is on a similar trajectory to the multi-year appreciation of the dollar in 2014 and will soon replace the U.S. currency as the outperformer in the $5.1 trillion market.
After reaching a 13-year low at the beginning of this year, the euro is set to rebound. It has risen against every major currency in this quarter, while the dollar has continued to fall opposed to its counterparts.
Analysts have been raving about the rise of the euro-dollar trade. David Bloom, head of currency strategy at HSBC Holdings Plc, said in a Bloomberg Television interview, “There’s been a complete flip over from this total optimism from the day we had the U.S. election where everyone was dollar bullish, politically bullish, cyclically bullish,” said David Bloom, head of currency strategy at HSBC Holdings Plc, in a Bloomberg Television interview. “You sit here today -- that’s the attitude of Europe and not the United States.”
The currency is up 5.9 percent year-to-date, after falling 6.4 percent in the fourth quarter. And HSBC is not the only company to produce an outperforming forecast. “Like the dollar, a similar thing could also happen to the euro. Particularly when the ECB is urged to stop QE because the economy is too strong right now, with respect to trade surplus manufacturing, and consumer sentiment to justify an extension of QE,” added Thomas Flury, head of foreign-exchange research at UBS Wealth Management in Zurich.
While investors agree that the euro-dollar trade is indisputably climbing, many believe that there can be more value found in buying the currency against the yen. The euro has increased 7.6 percent versus the yen, and euro-yen forecasts have dramatically improved in the last month.