Most Expensive Euro on Record Has Traders Braced for Declines
- Nominal effective exchange rate reached an all-time high
- Dovish message from ECB this week can add pressure on the euro
The euro trades near a 17-month high versus the dollar, up more than 18% since falling below parity with the greenback in September.
Photographer: Angel Garcia/BloombergThis article is for subscribers only.
By some measures, the euro is at its most expensive level on record, potentially setting itself up for a fall if starts to undermine the euro area economy and forces the European Central Bank to turn dovish.
The common currency’s so-called nominal effective exchange rate, which compares it to the currencies of the euro area’s trade partners, has never been stronger. It’s also near its highest level against the yuan in three years, potentially dimming the appeal of the region’s exports at a time when a slew of data show both the European and Chinese economies are foundering.