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Where are the currencies heading?

The future of the Euro and the US Dollar

With the Euro debt crisis currently in full swing, coupled with the stagnant unemployment rates in the US, our experts analyse where the future for this pair lies.

"We could well see the Dollar strengthen in the final quarter of this year, due to the fact that investor sentiment always tends to swing towards the dollar as a 'safe-haven'. However, with recent comments from US Federal Reserve Chairman Ben Bernanke to 'boost and support the economy', we think that he may introduce another round of quantitative easing in the beginning of next year. If this happens, the Euro could strengthen as investors will come out of the Dollar and look to economies which have a lower appetite for risk.

"September's dovish stance by the European Central Bank (ECB) has lent some support to the greenback in recent weeks. There has been speculation that both the ECB and the Federal Reserve could be involved in some form of coordinated easing of monetary policy, and investors will watch closely the balance of such measures to gage the possible direction of the cross. Even so, given the on-going European debt crisis, my personal medium term view on the Euro remains bearish and I expect the dollar to increase in value against its European counterpart in the coming months, with the Euro perhaps falling to as low as $1.30."

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