Meanwhile, Lina Fransson, a fixed-income strategist at SEB, told CNBC via email – before the sharp drop in the euro – that she expects the dollar to continue weakening against the euro.
“The U.S. dollar has weakened in the last couple of months and this morning, it reached its weakest level against the euro and the krona since last summer/autumn (fall). EUR/USD now trades around $1.1350 while USD/SEK is around $8.60,” Fransson said.
She, however, explained that a widespread disappointment of the Donald Trump administration and its lack of action in terms of economic reforms and tax cuts is one reason for the weaker dollar, and yesterday the IMF (International Monetary Fund) lowered its U.S. growth forecast saying that the prospects for fiscal stimulus have faded.
“At the same time, the euro zone is painting a brighter picture and growth has surprised on the upside since the end of last year. Yesterday, the ECB’s Mario Draghi delivered a message of increased confidence in the prospect of growth and inflation, which contributed to a stronger euro and the 10-year German yield increased by more than 10 basis points,” she said.
Fransson also thinks that financial markets overreacted on Draghi’s message but given the overall picture in the U.S. and the euro zone, she expects the dollar to continue weakening against the euro.