EUR/USD Exchange Rate Forecasts for November

Analysts have updated their near-term euro forecasts following the ECB’s October policy meeting shock - will EURUSD slip below 1.10 or will the stubborn euro fight back?

Finally those with an interest in the euro to dollar conversion have some volatility to get them excited. Whether you are watching the retail market for payments or speculating on direction, the views of those leading analysts we follow should help you take the next step forward.

The EUR/USD is likely to tread ground for a few days as short-covering following last week's deep declines provide some near-term support.

The euro was punished by the European Central Bank (ECB) on the 22nd of October when decision makers said they are ready to increase stimulus.

The ECB acknowledged that the intensification of downside risks to euro area growth and inflation over recent weeks had increased the likelihood of a further bout of monetary stimulus before the end of the year.

There was even discussion over cutting interest rates further - as we have heard before this would be a significant trigger to a lower euro - as opposed to the talk of further quantitative easing.

According to Barclays’ Head of Macro Research, Ajay Rajadhyaksha, cutting the interest rate further would probably be the most effective way to depreciate the euro further.

We believe the decline in the euro exchange rate complex is a reflection of the market latching onto talk of another rate cut, as opposed to the extension or enlargement of quantitative easing.

So the question now becomes, how far will the euro fall? It depends who you ask.

Lloyds Bank: Why Monday and Tuesday Could Favour the Euro

"Once again the FX market has reacted somewhat more aggressively than rates, so there is scope for the EUR to correct a little in the near term. Monday afternoon's and Tuesday's are often periods that see a turnaround of the previous weeks major moves."

Kathy Lien, BK Asset Management: Below 1.10

EUR/USD is headed for a break of 1.10 because unfortunately the strength of the 2% decline on the 22nd of October indicates that investors were not positioned for the degree of dovishness coming out of the ECB.

"If they were, the currency pair would not have experienced the largest one-day drop in 2 months.  Typically this type of strong move has at least 1 to 2 cent of continuation. 1.10 is very significant support in EUR/USD and we expect this level to be tested and breached for a possible drop to 1.08."

Chris Turner, ING: USD Upside Limited

"We expect the euro to consolidate this week given a) the bulk of the immediate dovish Draghi effect is now likely behind us b) for EUR/USD, the outlook for US data this week does not argue for more USD upside."

Bill McNamara at Charles Stanley: 1.08 Forecast

"The euro has spent several months in a trading range relative to the dollar and, excluding the
spike up to 1.16 in late August (which lasted a single day) resistance has, for most of this period, been at 1.145, i.e. the intermediate peak from May.

"However, last week’s price action represented a significant pull-back from the upper end of this range and the 2.9% loss for the week as a whole represented the single currency’s worst performance in five months. Although some support is possible at 1.10 or so a reversion to the July low, at 1.08, would not be too surprising in the near term."

Karen Jones at Commerzbank: Rebounds to Remain Tepid

"EUR/USD is seeing a minor bounce from its 1.0965 7 month 2015 support line, we would allow for this to hold the initial test, but look for rebounds to remain tepid.

"Rallies are indicated to be likely to hold 1.1080/1.1140. As far as we are concerned it is only a matter of time before we see the next leg lower and look for losses to 1.0808 and 1.0457, the March low."