Looking ahead at the Euro

David Powell, currency analyst at Ideaglobal, says the “market is pricing in a 40-percent chance of a 2.75-percent rate by March.” The ECB is set to meet next on Jan. 12.

But, given the overall sluggish growth forecasts for the Eurozone into 2006 and the still negative interest-rate differential vs. the U.S., analysts are not turning wildly bullish on the European currency. In fact, some still see room for additional downside in the Euro in the weeks ahead, especially given the ECB’s mixed message that any future tightening could be “moderate.”