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Euro strength seen as temporary

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The Euro gave up some of its gains on Friday but still remained comfortably above the US$1.11 mark after Thursday’s stellar rise on the back of ECB president Mario Draghi’s speech.

At close of trade on Friday the Euro was trading at US$1.1151 against the US dollar after pushing as high as US$1.1212 in the previous day.

The move from the ECB to lower interest rates into negative territory and increase stimulus were supposed to be measures to weaken the Euro, as investors would seek higher returns by putting their money abroad in search of higher returns.

The plan seemed to have backfired, sending the Euro higher and probably left many at the ECB scratching their heads.

The strength according to many analysts however, is likely to be temporary with some predicting after a period of stability, the European currency will move towards parity with the US dollar as the year unfolds.

Even after the latest round of further stimulus from the ECB Goldman Sachs are still predicting that the Euro will fall to US$95c by years end and have one of the most bearish outlooks for the currency.

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