Tatiana Kashyrskaia
Merrill Lynch has recently released a negative forecast for the common European currency. The experts assume that the devaluation of the Euro is almost inevitable. The only way to presume the eurozone is to let the EURUSD exchange rate go 20% down. However, they warn that investors will treat such a scenario as a default.
The experts from Merrill Lynch assume that devaluation may save the eurozone as in this case no member would want to quit the currency union. In this case, Italy will be able to resort its competitiveness.
On Friday, EURUSD hit the lowest level since may 2010 - 1,2214.
The experts also assume that devaluation will help Germany to boost its export outside the eurozone. At the same time, more stable demand for the products made by eurozone members will give them enough time to implement all the necessary reforms and to toughen the budget policy within the currency union.
Financiers assume that the eurozone will either break up or devalue its currency. However, Merrill Lynch is not completely pessimistic about the destiny of the Euro because this year we will witness presidential elections in the USA and a change of power in China.
According to , EURUSD looks determined to commit a bullish reversal. However, it is too early to go bullish. It is necessary to wait till the stage of minor internal correction patterns is over. Prior to reversing the trend, the price still can make another low.
Tatiana Kashyrskaia
