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EUR/USD to Correct in 2008
The median U.S. dollar gain versus euro, estimated by the foreign exchange market experts for the next year, is 3.5%. The dollar is believed to gain strength in 2008 after two years of a pretty fast decline and hitting the historical minimums against several major world currencies. Surveyed by Bloomberg News, 42 currency analysts estimate that record foreign currency inflows into the U.S. economy will help it to recover from financial and housing crises. This would allow a faster pace of improvment for dollar’s stance in the Forex arena, especially against euro, which has been one of the highest earners against U.S. currency. Net foreign purchases of the U.S. assets started to grow since the subprime lending slump caused many American financial companies to report losses and depreciate on the stock market. International funds decided to buy these “cheap” shares, which will be regaining their value after the financial volatility goes down. As to the Japanese yen, currency strategists don’t expect a reversal in the current bearish USD/JPY trend. Yen will benefit from the carry trade unwinding and will rise against both U.S. dollar and euro in 2008, analysts believe. The dollar is currently trading near its lowest levels, but has already started to recover in mid November. If January won’t bring any unpleasant surprises for this currency, it can face a real rematch against euro and (whic is even more probable) pound.
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