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Euro Outlook Dims Amid Rate Cuts

Analysts slash euro forecasts as easings eliminate one of currencys supports.

By Lukanyo Mnyanda and Catarina Saraiva, Bloomberg | Updated on December 12, 2011

Foreign-exchange strategists are slashing their forecasts for the euro at the fastest pace this year as European Central Bank President Mario Draghi’s interest-rate cuts remove one of the currency’s pillars of support.

Since Nov. 3, when Draghi began to undo the rate increases implemented earlier this year by his predecessor, Jean-Claude Trichet, analysts have reduced end-of-2012 estimates for the euro to $1.32 from $1.40, based on the median of 40 forecasts in a Bloomberg survey as of last week. It has weakened versus every major currency except the Swiss franc since then, after gaining against 12 of the 16 this year prior to that.

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