Positive U.S. economic fundamentals, especially compared to the situation in Europe and Japan, give the dollar more room to soar, experts say.
Greece’s financial crisis in particular supports the dollar against the euro.
“We have clearly underestimated the impact on the euro from the European sovereign crisis,” Goldman Sachs analysts led by Thomas Stolper wrote to clients.
The analysts decided to abandon the bullish euro stance they adopted just two weeks ago, Bloomberg reports.
“Building consensus among euro zone members is becoming increasingly difficult. These political headwinds currently matter far more for the euro than the cyclical factors.”
The euro has plunged to a 10-month high of $1.3320, and some say the move is just getting started. The euro recently traded at $1.3551.
A year ago Alan Ruskin, chief currency strategist at Royal Bank of Scotland, predicted – correctly – that the dollar would drop and compared it to the fall of Rome.
Now, he says that if Greece defaults on its debt, the euro could slip another 18 percent to $1.10.
“We’ve moved away from the worst fears,” he told Bloomberg.
“In the U.S., the economy picked itself up off the ground. Compared to what it might have looked like from the view of March 2009, March 2010 looks very good.”
Another euro bear is Michael Hart of Citigroup. “The euro zone faces its first existential crisis since the currency was launched,” he told the Financial Times.
“This seemingly vindicates the skeptics.”
© 2017 Newsmax Finance. All rights reserved.