European Central Bank plan to buy bonds began today, Monday 9 March 2015. EUR so low that trades on one-to-one basis with the dollar.
ECB determination to spend €60 bln every month ($65 bln) as part of its bond-buying program, and U.S. Federal Reserve prepared to raise its interest rates as early as June, made investors shy away from the euro.
Since summer 2014, the euro lost over a fifth of its value against the greenback. On Friday, the euro plunged as far as $1.083, its lowest level since 2003, but managed to crawl up at the end of the day to $1.084. EURUSD currently trades at 1.086, sliding from today’s high of 1.090.
Additional pressure came from the U.S., when better-than-expected employment figures came out. Nonfarm Payrolls for February at 295K, versus 240K forecast and 239K previous. While unemployment rate measuring percentage of the total number of unemployed actively seeking a job in USA in February showed 5.5% versus expected 5.6% and previous 5.7%. Both data mean bullish scenario for USD and gains against all major currencies. If current trends continue, the euro could soon sell for $1, according to WSJ.
The euro was last equivalent against the dollar more than 12 years ago, in November 2002. In July 2008, it boasted its all-time high level, just over $1.60.
ECB President, Mario Draghi pointed out the benefits of the euro’s drop at the news conference on Friday, stating that a weaker euro could be a gift for the currency alliance, as it can support economic growth by increasing demand for cheaper exports, and at the same time help increase inflation by higher import prices.
There are some analysts who think the euro will rise, especially because the ECB’s bond buying has been announced well in advance.
“We are getting very close to a turning point both on the euro and on rates,” said Aurelija Augulyte, a strategist at Nordea . Augulyte also said “I want to go long the euro versus the dollar now,” showing her belief that the euro will eventually rise.
MT4 GRAPH: EURUSD
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