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A new “king of currencies” has emerged in the world

Analysts expect further strengthening of the European currency

Despite the fact that the economies of Europe were seriously affected by the coronavirus crisis, during the pandemic, the European currency strengthened by 12% against other world currencies. As analysts from Bloomberg explain, the euro is growing not only thanks to the actions of the EU itself but because of the policy of the US Federal Reserve, which significantly weakened the dollar.

“Strategists at Mizuho International have honored the euro with the title of” king of currencies “- an award usually reserved for the dollar. The reason is the uncertainty over the US presidential election, which helps to further increase the attractiveness of European assets,” experts say.

According to them, now hedge funds are betting on the next jump in the euro to $1.25 per euro. Analysts polled by Bloomberg are not so optimistic and forecast $1.18 per euro for the third and fourth quarters of 2020. The euro is currently trading at $1.19.

The euro exchange rate can reach such high marks after the US elections. Despite the fact that the dollar usually rises after the presidential elections, this time things may be different, analysts say.

“The victory of President Donald Trump's rival Joe Biden could hurt the American currency as the Democratic candidate called for higher taxes for wealthier Americans and more federal spending. And Biden is leading according to opinion polls,” the report says.

In addition to the US elections, the euro is also playing into the hands of investors' optimistic expectations regarding the recovery of the European economy.

“We expect the eurozone economy to be better than other countries, and believe that the euro is undervalued in international portfolios,” said Jari Sten, chief economist at Goldman Sach in Europe.

Recall that at the beginning of the coronavirus pandemic, the US Federal Reserve cut the rate to almost zero. The American regulator took such measures in the hope of reviving the economy.

It was also reported that in 2019 the new banknotes of 100 and 200 euros began to circulate in the EU.

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