Determine the Euro\'s Potential movement In The Next Year Applying the Euro As a

Question

                                                                                     Determine the Euro's Potential movement In The Next Year

Applying the Euro As a financial analyst, you are asked to advise a MNC about its one-year investment plan next year in Germany. Because the investment is denominated in euros, you are asked to forecast how the euro's value may change against the U.S. dollar over the 1-year period. For your assessment, use all of the three major forecasting techniques.

Fundamental forecasting

Technical forecasting

Market-based forecasting

Note: Students will be assigned to teams. Each team should be responsible to assess the next year move of a major currency against the U.S. dollar as noted below, applying the scenario you just read.

Euro against U.S. dollar:

Explanation / Answer

Dollar may fight back against many global currencies ,it could struggle to recover lost ground against the buoyant European single currency.“Political instability in Italy and Germany is easing and economic growth has strengthened across the eurozone, while recent free trade agreements with Canada and Japan should also help.”

The single currency should receive a further boost if the European Central Bank starts to unwind its €1 trillion ($1.2tn) monetary stimulus package .the euro could dip against sterling if there is progress in signing a post-Brexit trade deal with the UK. “However, political risk in the eurozone is now falling in stark contrast to the politically-charged atmosphere in the UK, so the euro should remain strong.”

as president Donald Trump’s move to slash corporate tax from 35 per cent right down to 20 per cent inspires US companies to repatriate trillions of dollars held overseas.

“This will heighten demand for the dollar, increase domestic investment and strengthen the economy, all of which should boost the greenback,” so it is advisable to MNCs to invest in conservative way in Germany as US dollars is strong

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