At the end of the last year, economists in unison made rather gloomy forecasts for the euro. True, the euro looked like an outsider in comparison with other currencies. The eurozone economy was in a downturn and the economic indicators were weaker than ever. Some analysts even predicted a looming recession for the euro area.
When the coronavirus outbreak occurred, market participants were avoiding the euro like the plague and in March, the single currency hit its three-year low. However, the EU central bank as well as leaders of the member states had promptly responded to the coronavirus-driven crisis. The central bank supported the economy, as well as financially suffering economic sectors and businesses, with necessary fiscal stimulus measures worth €750. The large-scale aid packages were adopted in many EU countries. Moreover, EU leaders agreed on the long-term budget and the size of loans to the states severely hit by the pandemic. Thus, the euro was slowly but surely gaining momentum amid the positive fundamental factors. It managed to develop a strong rally over the past five months. In early September, the euro exceeded the $1.2 mark for the first time in two years. Importantly, an upswing in its value occurred during the most devastating economic crisis over the past 50 years. In the past, the European currency usually strengthened along with the global conjuncture.
Some economists believe that the euro advanced amid the massive aid package worth €750 billion introduced in the summer by the ECB. They also add that the regulator will try to halt the growth of the single currency as a stronger euro weakens the export potential of the EU. Many EU states, especially Germany, are export-oriented countries, which means that the growth of the euro exchange rate is likely to affect their economic expansion. Other experts suppose that after rising to the level of $1.2, the euro will lose steam.
