Euro to rebound strongly in 2024, driven by dollar weakness and return of European investment

Analysts at RBC Global Asset Management expect the euro to rebound strongly in 2024,
with a potential gain of up to 10%.
This outlook is based on two main factors: the weakening of the US dollar and
the return of European investment to the home market.

Topic

Weakening of the US dollar

Return of European investment to the home market

Conclusion

Weakening of the US dollar

The US dollar has been on a downward trend since the end of October 2022,
and analysts expect this trend to continue in 2024.
This is due to a number of factors, including:

Rising inflation rates in the United States, which are pushing the Federal Reserve to raise interest rates.
Weakening economic growth in the United States, which is reducing the dollar’s appeal as an investment asset.
Improving economic growth in Europe, which is making the euro more attractive to investors.

Return of European investment to the home market

Analysts expect European investment that has been made outside the region to return to the home market in 2024. Around €4 trillion of European investment has been made outside the euro area since 2014, when the European Central Bank imposed negative interest rates. This is due to a number of factors, including:

Rising interest rates in Europe, which are making European investment abroad less attractive.
Improving economic growth in Europe, which is creating more attractive investment opportunities.

Conclusion:

Analysts expect the euro to reach $1.21 against the dollar by the end of 2024. However, they warn that the outlook could change if economic growth in Europe or the rest of the world weakens.

Euro to rebound strongly in 2024

Euro to rebound strongly in 2024

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