Buying Euros outlook: Will the Euro weaken ahead?

Euro performs well against the pound but falls against the US dollar due to Italian Coronavirus fears

The Euro has been facing scrutiny relating to the ongoing developments around monetary policy in the single currency bloc. The Eurozone has been stagnating, with fears that Germany, the biggest economy in Europe, will enter recession this Autumn. This is a scenario expected by even the German central bank, the Bundesbank.

There’s increasing concern over the outlook for the Eurozone, a situation in part influenced by the growing global concern over the USA’s and China’s trade wars. As such, speculation has been rife that the ECB (European Central Bank) will begin some form of ‘easing’ policy measures at its upcoming meeting on the 12th September.

Such ‘easing’ would typically weaken the currency concerned, although there are no guarantees that this will happen. It might be said that some of the recent weakness in the Euro is a result of the above outlined expectations. Moving forward, the meeting may not carry the same weight initially granted to it.

Nevertheless, the upcoming meeting will provide further insight into what the currency market believes lies ahead for the Eurozone economy. In part, this is because the market will learn the latest reports from the ECB policymakers, including President Mario Draghi. With Mr. Draghi’s term ending in October, this will be one of his final meetings and he could be looking to make a name for himself. This is to ensure that he is not leaving with the economic outlook for the single currency bloc in too bad a shape.

Should I buy Euros now or wait?

Mr. Draghi has been credited with “saving the Euro”, following his announcements previously that the ECB would do “whatever it takes” to shore up the Eurozone’s financials. The ECB’s policies of low interest rates and Quantitative Easing (QE) have seen the Euro losing ground at times. So it will be interesting to see what the outcome from the meeting is.

Any clients looking to buy or sell the Euro might wish to highlight their position to our team in advance. This way, we can provide a detailed assessment of your situation and possible options to help manage your currency exposure. You can contact me, Jonathan Watson, at jmw@currencies.co.uk.