Euro CHF change rate was near one-month lows ahead of ECB’s meeting

Growing skepticism

Investors have become more skeptic about the European Central Bank’s policy as concerns grow that there won’t be any rates hike in the foreseeable future. The meeting of ECB taking place this week is not expected to bring any changes, though the press conference after it will surely be widely discussed and analyzed on the market. As the timeline for change in ECB’s policy has become unpredictable, investors were keen to sell euros rather than buy them. The long positions on euro were cut by the biggest margin in nine months in the first week of April. Core European yields on bond went to negative area. PMI data gave signals that economy in the eurozone is really struggling. Even though at some point during the daily trading last week euro’s exchange rate hit higher notes at 1.1228 dollars, it was still dangerously close to one-month lowest point of 1.1183 dollars.

Better times ahead?

Even though the euro exchange rate is weaker against dollar, the beginning of April has not looked all bleak for the common currency. Comparing to its previous lows of the begging of the year or last year, it finally starts to rise a bit. The start of 2019 was the worst entering the new year for euro since 2015. Last year euro generally fell by 4.5 percent against the dollar, whereas this year in the first quarter the downfall was by 2 percent. This marks the worst first quarter for the common currency since 2015. April brought near month-lows but also some higher rates comparing to the first quarter. Perhaps concerns for rates were a bit muted by a possible China-US deal. Globally investors count very much on a deal between two countries in the second quarter of the year. It will ease global trade tensions and clam down nerves on currencies’ markets. Stronger euro run in the medium term is highly expected by analysts.

Analysts hope for stronger euro

The sentiment that the euros situation will get better is common among analysts, according to the survey conducted by Reuters. More than 75 percent of analysts indicated that it predicts the reverse trend of euro and a gain of as much as 5 percent by the end of the year to 1.18 dollars. It was a 20th connective poll in which analysts remain positive about euro’s gains in the 12-month horizon. However previously their hopes were trashed as euro fell by 5 percent against dollar rather than getting stronger. Additionally, over 65 percent of analysts answered in an extra question that risks to their euro’s exchange rate outlook for a year to come were skewed to downside as political uncertainty, the weak eurozone economy and a dovish approach of the ECB all took their toll on analysts’ sentiments. Investors though foresee the end of the FED’s hike rates policy, which will move the momentum to the euro at some point in the future and make dollar weaker.

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