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Dollar-Euro parity

Your questions answered by our Currency Expert John Cameron. Click here to ask your currency question...

On Sunday, 1st November 2015 following question to our expert...

Most sources seem to indicate dollar-euro parity in October of 2016. Do you agree? Do you think parity is inevitable?

We want to move a large sum of dollars(our life savings) into euros as soon as the dollar catches or overtakes the euro.

Thank you. Richard and Alicia

On Monday, 2nd November 2015 ...

Richard & Alicia,

Thanks for getting in touch.

In answer to your question, the European Central Bank (ECB) and the US Federal Reserve appear to be on drastically differing policy paths. Last week’s commentary from the Fed, which dropped the allusion to global economic problems which previous recent texts have contained, has made a US interest rate hike more likely this year, in the minds of investors at least.

Meanwhile, Mario Draghi’s assertion last month that the ECB will ‘re-assess’ the scope of its current €65bn per month Quantitative Easing programme in December has been taken by most analysts as a ‘pre-announcement’ of additional Eurozone QE in 2016.

If the ECB and Fed’s policy paths do indeed further diverge in December, then we would factor in a high percentage chance that the EUR USD exchange rate will slump to parity. There will be strong technical resistance at this level, so if it does go there would be wise to consider acting expediently.


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