Forex News – Dollar to strenghten against Euro over next 12 months

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A Reuters poll that surveyed economic analysts on their outlook on the Euro was released today. Only seven out of 59 analysts thought the Euro would be stronger against the dollar 12 months from now.

Most analysts expect the greenback will most probably claw back some of its losses against the Euro over the next twelve months as the Single Currency is expected to sag despite looming ECB rate hikes.

“We remain structurally bearish on the Euro, although rate expectations should keep it supported in the short-term, until the USD recovers lost ground,” said Chris Walker from UBS.

Since May 23 the Euro has surged more than 4 percent against the US Dollar boosted by expectations the European Central Bank will raise interest rates again in July.

Many economists believe that it is unlikely that rally will last, especially if forthcoming economic data entrench the view that the world’s global economic engines are cooling fast, which could see investors fleeing back into the greenback, which is a traditional safe haven.

“The U.S. Dollar remains beholden to the economy and rates, but also politics into mid-2011. Despite the market’s ‘natural’ negative view of USD, perceptions could quickly shift,” said Tim Riddell from ANZ.