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Euro Could Plunge to $1.05 If Chinese Gloom Grows

  • Slowing Chinese growth is weighing down the European economy
  • U.S. outperformance and global uncertainty will support dollar
Fifty euro banknotes

Photographer: Simon Dawson/Bloomberg

The euro could weaken to levels last seen in early 2017 if China’s economic slowdown persists, according to Stephen Jen, chief executive officer of Eurizon SLJ Capital.

Jen said the common currency could slump to $1.05 later this year if stress emanating from China bleeds further into Europe’s economy and prevents the European Central Bank from normalizing policy, while the U.S. “continues to outperform.” Fiscal stimulus and slowing structural reforms in China probably won’t be sufficient to spark a “V-shaped recovery” in the first half of 2019 for the Asian nation, according to Jen.