Barclays bank has predicted the euro foreign exchange rate will hit parity with the US dollar by the end of 2015 due to the ECB’s asset purchase program and increased risks of a crisis to the euro bloc.
Barlcay’s predicts the euro will weaken to $1.08 by the end of June, and to $1.05 by the end of September. But Barclays anticipates that by the end of the year the euro will be trading at a 1-to-1 ratio with the U.S dollar for the first time since 2002, the year it entered circulation as a physical currency. That forecast is down from Barclays earlier prediction that the euro would trade at $1.07 by the end of 2015.
“Against the backdrop of a constructive U.S. outlook and a more proactive ECB, we continue to see significant downside to the euro against the dollar” Barclays said.
The euro lost about 12 percent versus the dollar in 2014. In January, it fell 6.7 percent. On Monday, one euro was trading at $1.1345, not far from its lowest level since September 2003.
The speed of the euro’s fall has caught many analysts and strategists off guard, forcing many to repeatedly drop their forecasts with each lurch lower. Other banks slashed their forecasts for the euro against the dollar last month. After the ECB announced its quantitative easing program on January 22nd, Bank of America Merrill Lynch lowered its euro forecast to $1.10 by the end of the year from $1.20, and to $1.05 by the end of 2016.