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Political instability may force EUR to fall back down to parity with USD
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Political instability may force EUR to fall back down to parity with USD

Lately, the European currency has had a rough time. It frequently faces volatility due to political uncertainty in Europe.  Events in the United States, linked to the upcoming presidential elections, are adding fuel to the fire. According to some analysts, current events could push the euro to parity with the dollar if the White House under Trump adopts aggressive protectionist trade policies.
"We see EUR/USD (and many other dollar pairs) staying weak below 1.10 for the next two years," Deutsche Bank analysts claimed. ForexLive currency strategists disagree, predicting the euro/dollar pair to fall to $1.0500 by the end of 2024.
Political uncertainty, which has again gripped the eurozone following the snap elections in France, is putting pressure on the European currency. Experts believe this move could result in the formation of either a far-left or far-right government. Additionally, the French parliament will remain in limbo, making it difficult for the government to function and negatively impacting Europe's competitiveness.
Deutsche Bank analysts think that they will have to "revise their EUR/USD forecast closer to parity." They believe the upcoming US elections and the extent of aggressive protectionist trade policies could be a negative driver for the euro.
Earlier, Donald Trump, the former US president, promised to escalate the trade war, proposing "reciprocal tariffs on any country taxing US exports." Furthermore, the billionaire suggested imposing duties on most imports.
Deutsche Bank concluded that if Trump were to win the upcoming presidential race, his measures might be the final nail in the euro's coffin. Analysts suggested that this could lead the single currency to rush to parity with the US dollar, prompting them to revise their EUR/USD forecast.
Published 05 July 2024
© InstaFintech Group
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