Bank Expert Euro (EUR) Forecasts for 2021: Slowly Improving
This article looks at the long term trend in the Euro (EUR) forecast in 2021.
In 2021, most banks forecast the Euro will strengthen against the US Dollar in the second half of the year. However, a severe second wave of coronavirus infections and uncertainty over the political and economic impact could see Euro forecasts change in 2021 and beyond.
Bank experts also anticipate that Britain leaving the Eurozone (Brexit) will be finalised in the first half of next year, which could support the Euro and the Pound.
How does the coronavirus pandemic impact exchange rates?
Uncertainty from the coronavirus pandemic increases volatility in currency markets, including the EUR and GBP. Generally, safe-haven currencies like the USD, CHF and JPY moves higher. However, commodity currencies such as the AUD, NZD, CAD and ZAR exchange rates tend to fall. Banks anticipate the USD will remain relatively weak compared to the Euro particularly in the first half of 2021.
Check today's Euro to US Dollar (EURUSD) Exchange Rate: Currency Converter and Graph
Be the first to know about great rates
Simply set up an alert for the currency and rate you want and we'll email you when it's time to buy. We track live rates of over 60 currencies to make sure you're the first to know.
Euro USD forecast in 2020
Most bank forecasts show the Euro has been weaker than expected in 2020. Banks have frequently had to adjust Euro currency pairs (EUR against other exchange rates) to reflect a falling EUR trend.
Will the Euro get stronger beyond 2021?
Maybe, if the coronavirus pandemic is controlled effectively going forward.
Let's examine 5 reasons the Euro could remain weak at current forecast levels:
- Coronavirus pandemic worsens in Eurozone countries and public health systems are unable to deal with the number of people with serious health issues from the virus
- The US economy picks up, US political risks ease, and the Federal Reserve (central bank) increases interest rates, supporting the USD
- Slowing European Union economies led by the German economy. Weaker global growth equates to a falling Euro
- Britain's exit from the EU (Brexit), ongoing uncertainty leads to a weaker Euro rate relative to other currencies (apart from the British Pound)
- China’s economic growth slows, reducing China trade and lowering demand for European imports
What's the impact of a weak EUR?
A weaker Euro might not be great for citizens of the 19 countries in the Eurozone, especially if they want to move or travel overseas or who are already living abroad in another country. Fortunately, they might be able to transfer money overseas at better rates in the second half of 2021 if bank forecasts are accurate.
If you’re planning to travel abroad a stronger Euro will certainly help you, particularly if you choose a destination with a weaker currency. However, travelling right now isn't a possibility with the current coronavirus pandemic placing many countries into lockdown. Fortunately, in 2021 travel may be possible between countries with an agreed travel bubble.
What are the key influences on future Euro exchange rates?
1. Eurozone Economy
Growth in the 19 Eurozone countries has been weak in 2020. Uncertainty over the coronavirus pandemic in terms of severity has pressured the Euro and the Euro against most crosses. A second wave of the coronavirus in Eurozone countries has also resulted in poor growth predictions, which may negatively impact the Euro in 2021.
2. EU Politics
Many are still unsure whether integrating the economies of 19 countries into one bundle (the Eurozone) including a common currency (Euro) will work. If one country has political issues, it can create uncertainty for the whole Eurozone. Greater uncertainty from politics means investors will sell the Euro, because there is a greater chance of it getting weaker.
3. Other Currencies
The US dollar (USD) has a significant influence on the Euro. Generally, when the USD gets stronger, the Euro is relatively weaker and vice versa. With the USD anticipated to remain weak, the Euro will likely remain supported.
EUR to USD
EUR bank forecast currency pairs
Most of the major banks agree the EURGBP cross rate could fall further in 2020. With all of the political issues around the UK exiting the Eurozone, there is still a lot of uncertainty and it looks like banks are taking a cautious approach to forecasting the EUR GBP.
EUR to AUD forecast
Banks are currently expecting the Australian Dollar and the Euro to improve in 2021. This means the EUR exchange rate might not move relatively too much against the AUD next year.
EUR to JPY forecast
Most bank analysts agreed the EUR JPY would move higher in the first half of 2021. However, the Euro is expected to underperform the Yen in the second half of the year.
Compare international money transfer exchange rates and fees
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, financial or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.