Could the euro be on it's way to 1:1 vs. the USD?

Discussion in 'Forex - Currencies Forums' started by SamClemensMT, Jan 23, 2015.

  1. SamClemensMT

    SamClemensMT Well-Known Member

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    I didn't think it would come to this. I finally closed my long EUR/USD position. It became obvious that it was time to cut my losses. Could the euro be headed for parity with the U.S. dollar? It appears possible.
     
  2. Fredrick Jones

    Fredrick Jones Well-Known Member

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    The entire EU is based on a false premise. How can you have the same laws for different countries. The culture of Germany is a lot different then Spain and Greece for example. Countries like Germany are getting fed up of carrying other countries. Also the economic disparity between the member states is another problem.

    Eventually the union has to break or entire Europe will get dragged down with it.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

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    A lot of people have been talking about parity for a long time. Kind of a double edged sword for me, I live in the euro zone but most of my investments are in USD and CAD. That's obviously good for the value of the investments but it's getting tough to make new ones when the euro is so weak and the markets are so high.

    But I think it's definitely possible. US economy is strong and as we saw yesterday, the EU is doing everything in their power to lower the euro since they need a weak euro and high inflation.
     
  4. Rainman

    Rainman Senior Investor

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    It's possible that pretty soon Euro's value will drop further. Experts say it's possible. In fact even those who aren't experts can see for themselves which direction the Euro is headed.
     
  5. Gelsemium

    Gelsemium Senior Investor

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    I am really surprised the way the euro has been climbing, just a few weeks ago it was at 0,76 and today it's at 0,85 and rising. 1-1, it's quite possible!
     
  6. BudFox

    BudFox Well-Known Member

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    It depends on central bank intervention in the short term. Don't forget that Germany has a huge fear of inflation and wont let any printing money schemes get too far out of hand. Germany is also happy to manufacture and export with a dog of a currency so the US may yet feel repercussions on their own markets. I reckon 1.1 to 1.05 in the near term but no further; the US wont allow it.
     
  7. crimsonghost747

    crimsonghost747 Senior Investor

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    Yeah that is the thing, when will the US start to do something about this? Their economy is getting nicely on track but the strong dollar will have a negative effect on foreign sales and company earnings as a lot of their companies get a part of their revenue in other currencies.
     
  8. Peninha

    Peninha Senior Investor

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    Yep, even if the euro is climbing soon enough some financial engineering will make it drop again, I don't think there's an interest from the US in seeing the dollar more valuable than the euro.
     
  9. TipdOff

    TipdOff Well-Known Member

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    Well, yes, a stronger dollar means more expensive exports for the US, but at the same time cheaper imports. Just today there was a report about how a company like Tesla, for instance, is net benefitting from the stronger dollar. Tesla's component suppliers are 70% international, meaning that it becomes cheaper for Tesla to build its cars. Sounds unlikely that the US would try to "engineer" a lower value dollar. In fact with a rebounding US economy, there is more likelihood of rising interest rates, which would cause the dollar to rise. In the end, the "free market"/global market conditions will drive the value of the currency.
     
  10. crimsonghost747

    crimsonghost747 Senior Investor

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    Free market rarely drives currencies... it might seem that way but there are a lot of things that the governments and central banks do in order to keep their currency where they want it. So yes the price is decided by the market, but these organisations decide which news and what type of information the market is making their decisions on.

    And while there certainly are companies that benefit from lower USD, it does more harm than good to the general economy. Especially big industrial nations like the USA want to keep their companies (well the products of their companies) competitive and a weak dollar is one way to do it. And while on the topic of investing, it will also drawn capital from foreign countries to the US market. When 1 EUR was 1.40 USD I was buying left and right from NYSE with a smile on my face... now at 1.10 it suddenly looks much less attractive.
     

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