For ECB President Mario Draghi, the battle to save the euro seems to be over, however, according to some experts, the risk of further decline of the single European currency remains for investors.
"The euro is a big short position for us. The trade war between Washington and Beijing has quite a strong impact on Europe since Germany is heavily dependent on China. While global sentiment has improved somewhat recently, the topic of trade friction is likely to be relevant for many years or even decades," said James Binny of State Street Global Advisors.
Rabobank expects that by the end of this year, the EUR/USD pair will drop to 1.07, as growing concerns about global growth put pressure on exports from Germany and fuel interest in the US dollar as a safe-haven currency.
"Of course, it would be good if the Brexit deal took place, but the prospects for Germany are not so positive. The ECB will have to further soften the monetary rate. All these factors are negative for the euro," said Jane Foley, the bank's currency strategist.
Experts from Columbia Threadneedle Investments give an even more bearish forecast for the euro. They believe that the main currency pair can reach parity for the following reasons. Firstly, the US debt market rates are higher than in most developed countries. Secondly, the dynamics of American inflation indicate that the US economy is doing better than in other countries. Third, global GDP forecasts continue to deteriorate.
Lowering the interest rate of the Federal Reserve, it would seem, should lead to a weakening of the position of the greenback, but high investor demand for protective assets and the vulnerability of other world currencies give the opposite result: the easing of monetary policy of the Fed contributes to the strengthening of the USD.
According to BofA Merrill Lynch analysts, something similar happened at the beginning of the 21st century, when the American Central Bank lowered the interest rate eleven times, but due to the increased interest in reliable assets, greenback prices rose by 6.6% during the year. Now the story is repeating itself.
Investors are encouraged by the prospect of a Fed interest rate cut this week. They have little doubt that the regulator will once again cut the rate by 25 basis points. However, the market may quickly lose its optimistic mood if the chairman of the Federal Reserve Jerome Powell signals that this will reduce the rates.
The regulator does not need to cut the federal funds rate too much yet. Also, the central bank has returned to asset purchases, and although it prefers not to call it QE, its balance sheet has started to grow again.
If Jerome Powell's rhetoric turns out to be too "hawkish" following the October FOMC meeting, it will trigger a correction on the S&P 500 index, which managed to update historical highs, and lead to a deterioration in global risk appetite, which will become an occasion for purchases not only of the yen and gold, but also of the dollar.
Meanwhile, Germany's long-standing commitment to a balanced budget means it has so far failed to take advantage of ultra-low borrowing costs to boost spending to spur economic growth. It is predicted that in the third quarter, the "locomotive" of the eurozone will fall into a technical recession, and there are signs that the entire currency bloc will slip to it.
The fate of the euro also depends largely on the outcome of the trade war between Washington and Beijing. Business confidence and investment spending around the world have been hit hard by trade tensions, but the eurozone may be at a greater disadvantage than other regions because it is a net exporter.
"The eurozone's economic outlook indicates that the ECB will need to do more, and given that Germany's fiscal stimulus is not enough, the quantitative easing and lowering of interest rates by the ECB will be negative for the euro," said Claire Dissaux of Millennium Global Investments.