Western analysts make forecast on short-term rate of dollar to euro

Azerbaijan, Baku, Apr. 8 / Trend A.Badalova /

Following the significant weakening of positions in 2009, the U.S. dollar is once again beginning to gain momentum. The dollar has recovered significantly in the past month against the euro and the pound sterling. The rate of the dollar to the euro reached $1.3325 per euro April 7.

Analysts expect the dollar to continue strengthening this year, particularly against the euro on the backdrop of talks on tightening the monetary policy.

Economic Research-Capital Economics analysts, who earlier predicted the rate of the dollar against the euro to hit $1.25 per euro by late 2010, changed their forecasts to $1.2 per euro. The analysts do not exclude the possibility of a drop in the European currency to $1.10 in 2011.

According to British analysts, the gradual reduction of non-traditional monetary incentives may continue to support the dollar due to the weakening inflationary fears of investors.

In the second quarter of 2010, the rate of the dollar against the euro will hit $1.25 per euro and in the third and fourth quarters fall to $1.20 per euro.

The Bank of America - Merrill Lynch also expects further the strengthening of the dollar against the euro. According to bank forecasts, the rate of the dollar to the euro will hit $1.32 per euro in the third quarter of 2010 and rise to $1.28 per euro in late 2010

Meanwhile, analysts at the U.S. investment bank Morgan Stanley predict that the rate will reach $1.28 per euro in 2010.

Nevertheless, not all analysts believe the dollar will be able to maintain its leading position. The U.S. bank JPMorgan believe the fall in the euro is temporary.

Short-term forecasts on the rate of the dollar to the euro ($ / 1 €):