The euro is positioned to gain strength as favorable weather reduces energy costs, a trend that has already softened energy markets. In conversations with Bloomberg, researchers from Deutsche Bank, the leading German financial group, and Morgan Stanley in the United States shared similar optimism about the single currency’s path.
Projections point to a climb for the euro toward roughly $1.15, up from the current level near $1.07. Meanwhile, Nomura International, a Japanese financial services firm, forecasts a more modest peak around $1.10 by the close of January.
Mark McCormick, a strategist at TD Securities, the Canadian investment bank, emphasized that the improving weather could ease the eurozone’s recovery dynamics, tempering expectations for a rapid rebound.
Gareth Gettinby of Aegon Asset Management, a Dutch-based insurer, noted that unusually warm conditions have helped steer away from severe scenarios, including an energy squeeze that would otherwise weigh on markets. He added that as gas prices trend lower, the risks to the euro from energy volatility have diminished, providing investors with greater confidence about the currency’s near-term trajectory.
Writings in Kommersant this week highlighted another energy market factor: Europe’s exceptionally hot spell has driven down gas prices to about $780 per thousand cubic meters—the lowest level seen in the past year and dramatically below the peak seen in August 2022. This shift in energy costs is a key driver behind the current sentiment on the euro and the broader economic outlook across the region.