Euro "Bear" Gas Investment Banks Cut Down Exchange Rate Expectations

How much more could the euro fall? The answer has changed dramatically in just a month.

As the European central bank finally announced a comprehensive QE, all major investment banks began to sharply reduce the euro exchange rate forecast.

Many analysts have begun to speculate that the euro will fall to parity against the US dollar in 2015.

The last Euro to us dollar 1:1 date back to 2002.

Thomas Kressin, head of foreign exchange management at Pacific Investment Management, who manages assets of up to $1 trillion and 680 billion, said to the Wall Street journal.

If you asked me about the euro's exchange rate expectations a few months ago, I could not say that the euro would fall to parity in a few years.

But now, I think the euro will probably fall to 1:1 at the end of this year.

Morgan Stanley at the European Central Bank

After that, the euro was lowered to 1.05 against the US dollar in 2015, up from 1.12, while the Bank of America and Merrill Lynch predicted that the euro would fall to 1.10 at the end of the year, which was expected to be 1.20. HSBC's expectations for the euro dropped from 1.15 to 1.09.

22 of this month,

Delagi, governor of the central bank, formally announced the expansion of the scale of asset purchases.

From March, it will buy 60 billion euros a month until September 2016. If euro area inflation rises nearly 2%, it will stop.

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If it continues until next September, the total size will be close to 1 trillion and 200 billion euros.

The euro fell more than 500 points against the dollar in 24 hours after the announcement, and it continued to refresh its 11 year low after the announcement of the Greek general election on Sunday, with a minimum of 1.1097.

In the past few years, the euro has remained relatively high, mainly because the European Central Bank has implemented a relatively loose policy in comparison with other major central banks.

In 2008, 1 euros could be exchanged for us $1.60, and the euro was at 1.40 level against the US dollar in May 2014.

During this period, the Federal Reserve, the Bank of England and the Bank of Japan carried out different measures of easing.

J.P. Morgan Asset Management's fixed income CIO Nick Gartside believes that the European Central Bank's position has confirmed that QE will continue for a long time.

Torsten Slok, chief international economist at Deutsche Bank, said in an interview with CNBC.

Europe's problems will not disappear. The US will perform better and Europe will lag behind. This will put downward pressure on the euro for quite some time.

Jack Mclntyre, the securities manager of Brandywine Global, an investment management company, predicts that in the CNBC program,

The QE of the European Central Bank will push money out of Europe and to the United States.

Taking into account the short-term boost in the US economy to the US dollar, the euro will fall even lower against the US dollar and may fall below 1:1.

US Treasury bonds will be more attractive than German bonds with very low yields.