Forecast: Euro will continue to strengthen against US-dollar

Baku. 3 May. REPORT.AZ/ US dollar weakened against euro to the level of 1,16 USD/EUR on the world market.

Report informs, this is the lowest level since August 25, 2015. Notably, in August 2015 the dollar exchange rate was 1,1625 USD/EUR.As a result, the dollar weakened by 11% compared with the minimum rate.

The main reason for the weakening of the dollar is a postponement of the Federal Reserve System (Fed) decision to raise the key rate. Analytical group of Report previously predicted that. most likely, the Fed will not raise rates this year. Progressive realization of these expectations has led to a weakening of the dollar.

At the same time, indicators of the pace of US economic growth at around 0.5% in the first quarter of 2016 reduced optimism about the future of the economy.This reinforces expectations that the Fed will postpone raising key rates.Analytical group of Report believes the Fed may lower its key interest rate in 2017. In this case, appreciation of the euro against dollar to 1,22 USD/EUR is possible.

Currently, the dollar falls amid expectations of currency speculators about reduction in key rates by the Federal Reserve. In the EU, the key rate is 0%, interest rates on deposits are -0.4%. In Japan, the key rate used at -0.1%.However, despite the fact that the key rate in the US is 0.5%, depreciation of the dollar depends precisely on the probability of its reduction by Fed over the next year.