EUR/USD: Here’s Why the Euro to Dollar Exchange Rate Could Crash in 2016

In the eurozone, the situation is completely different. The European Central Bank (ECB) is involved in lowering rates. To keep them low, it is involved in asset purchase programs—in other words, printing money.

When we see a situation like this, the winner is usually the currency with the higher rate and the loser is the one with the lower rate. In this case, the winner would be the dollar and the lose would be the euro.

Eurozone Struggles While U.S. Booms

Also, another factor affecting currency value is economic activity.

As it stands, business activity in the eurozone remains anemic. We haven’t heard anything good. If you dig deeper, you will find that even the biggest powerhouses of the common currency region—Germany and France—are starting to show signs of weakness. Other troubled nations like Greece, Spain, Portugal, and Italy continue to face scrutiny, too.

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On the other hand, the U.S. is doing just fine. The growth rate may not be as great compared to its historical average, but it’s much better than the eurozone.

Don’t be too optimistic on the euro to dollar exchange rate going into 2016. The euro to dollar pair could continue to face pressures and decline.

With this, one question comes to mind: how low could the EUR/USD go? Don’t be surprised if we see the euro to dollar exchange rate hit parity or go much lower—maybe even to those lows made in 2001 and 2002.

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