EUR could touch the lowest point in near future

Short comment

I make target of EURUSD to 1.05. Although the currency has endured hardships very well, I think plunge of the currency could start in anytime.

Research Analysts in various institutions expected that stop of regional QE would give boost to regional currency. However, market situation is totally different now. Regional macroeconomic situation is more sluggish than expected, so some participants are expecting re-start of QE from ECB, regional central bank.

With the macroeconomic trend and expectation for dovish stance from the institution, regional interest rates are still in the lowest range. Yield of 10y German Bund went to below 0.1%. As regional market participants want higher yields for their investment, demand for long-term government bonds in France, Austria or Spain is skyrocketing. Even the riskiest Italian government bond got interests. The movement is dragging overall regional interest rates. Based on traditional relationship between interest rate and currency, dragging regional interest rate will be one of the reasons why the currency should not show strong momentum.

Political uncertainty is still remaining in the market, too. it is sleeping now, but Brexit, Italian populists or German regime change could come up again anytime and attack the currency. Some political experts are suggesting that resolution of trade-war between the US and China just change the subject from China to EU. Trump Administration is threatening European automobile industry with 25% tariff.

In fact, there is enough probability of weak USD, considering rally of risky assets. S&P500 is targeting 2,800 again and USD has reversed relationship with the risky assets. However, let's think relatively. Another global main currency, JPY, is considered to be safer than USD. Limited on the FX market, EUR has too much risks which do not bring appropriate benefits.

This year will be really hard time for EUR.