The Euro has been a disaster since its birth in 1999. Its monetary pathologies led to youth unemployment rates of 50 – 60% in Greece, Spain and the Italian Mezzogiorno. It gave a trillion-dollar windfall to German exporters at the expense of the hapless Club Med and amplified Berlin’s diktat over the lands once occupied by the Third Reich. It created the milieu for Brexit, the gilets jaunes riots in Paris and the surge of populism in Italy, reminiscent of the Mussolini era. Yet I believe serious money can now be made on this sad sack loser currency. I expect the Euro to rise to 1.23 against the US dollar by autumn 2019. Why?
One, the ECB’s €2.6 trillion bond-buying program that had so slammed the Euro to as low as 1.05 since early 2015 is now over.
Two, futures on the Chicago Mercantile Exchange do not remotely project an ECB rate hike in 2019. Incroyable, unmöglich, mamma mia! This is insane. The central banking gnomes in Frankfurt are giving clear monetary smoke signals that there will be one, possibly two ECB rate hikes by next autumn, not coincidentally at the tail end of the Powell Fed rate hike cycle. This will be a steroid shot for the Euro/dollar cross rate, 57% of the US Dollar Index.