EUR to USD Rate Falling Fast but Euro Could Face Even More Pressure in 2017
The EUR to USD exchange rate has hit a new low of $1.03. The question now is not whether the euro and the dollar will reach parity, but when. The euro has been suffering from pressure due to economic and political developments in December.
The U.S. Federal Reserve’s announcement that it would raise interest rates dealt the first blow. The EUR to USD moved to a range of $1.05–$1.06 after that announcement.
Advertisement
This week, the apparent terrorist attack in Germany will add considerable pressure against Chancellor Angela Merkel’s re-election chances next August.
Anti-euro and anti-eurozone candidates could take advantage of the resulting political vacuum. While it would be premature to speak of a movement to pull Germany out of the eurozone—Berlin has gained from the euro—other northern European countries might.
Some say, however, that the EUR to USD will not achieve parity in 2017. Rather, they suggest that $1.03 might be as low as it goes. (Source: “Is it Going to Be a New Year Parity for EUR/USD?” Pound Sterling Live, December 20, 2016.)
Yet the euro will not only have to face a French and German electoral test; there is a more imminent election in the Netherlands. The next Dutch election could see a win by right-wing nationalists led by Secretary Geert Wilders. He is leading the polls for the March 2017 parliamentary elections, according to a recent survey. (Source: “Dutch MP Geert Wilders’ far-right party rising despite his discrimination conviction – poll,” RT, December 12, 2016.)
The survey shows that the Freedom Party (PVV)—which is fiercely opposed to immigrants, the euro and the European Union (EU)—would win 33 of 150 seats in the Dutch parliament, thus becoming the first parliamentary group. Currently, the Freedom Party has 12 elected deputies in Parliament, but the results of the recent survey suggest that the number of those elected could triple by March 2017.
Commentators are already calling this situation the “Nexit.” Geert Wilders could not only adopt populist policies in the Netherlands; he would launch a prompt referendum, asking the Dutch to leave the EU and the euro. The Nexit would be a major blow to the single currency. There’s no doubt that 2017 promises to be an unforgettable year for the EUR to USD, perhaps even more than 2016.
