Is it time for the Euro to appreciate against USD?

Published on April, 14th 2021Market and research

Stéphanie BIGOU

Portfolio Manager

For Professional Clients in accordance with MIFID

Written on 12th April 2021 by Seeyond

Let’s look at the facts:

  • The Euro strongly depreciates since the beginning of the year. Especially against the US Dollar (from 1.23 to 1.17) but also against a larger basket of currencies.
  • Many expect that the narrowing growth differential between the US and the Eurozone will lead to an appreciation of the Euro.

We think it is still a bit early:

  • Several leading indicators indicate the Euro could further depreciate, such as the real interest rate differential between Germany and the US, continued high investor positioning on the Euro and the spread between 2-year rates in 2 years.
  • Even with accelerating vaccination campaigns the economies will be reopen very gradually. In Europe, the lassitude and financial damage caused by long months of lockdown could continue to weigh on growth, whilst the US benefit from the impetus given by the two new tax plans.
  • A delayed narrowing of the growth gap between the  two regions will also slow down the appreciation of the Euro against the USD …  unless Europe decides to implement a new stimulus plan. 


Source: Bloomberg, Seeyond - January 2002 to March 2021

This article has been provided for information purposes only to professional clients as defined in the MiFID Directive. It must not be used for retail investors. The provision of this material or reference to specific sectors or markets in his article does not constitute investment advice or a recommendation or an offer to buy or sell any security. Investors should consider the investment objectives, risks, and expenses of any investment carefully before investing. Views expressed in this article as of the date indicated are subject to change and there can be no assurance that developments will transpire as may be forecasted in this article.