The single currency is getting cheaper against the dollar for the second year in a row. In 2018, it lost 4.5% against the dollar, in 2019 – 3.39% (as of December 22, 2019). The key negative events for the single currency were the trade war between the United States and China, Brexit, as well as the soft monetary policy of the ECB.

After the conclusion of the interim trade agreement between the United States and China in January 2020, the parties will resume negotiations on the second phase. China is determined to put an end to the trade war, so if there are no surprises on the part of the United States, the demand for risky assets will increase.

Britain’s parliament has voted in favour of Boris Johnson’s Brexit bill that will allow the country to finally leave the European Union next month. Uncertainty remains for market participants over the UK-EU trade pact. It is unclear about the UK’s future relationship with the European Union.

Trump’s impeachment is likely to fail, as Republicans hold a majority in the Senate. It should not have an impact on the market, as the election of a new US president will take place in November.

The Federal Reserve said at the last meeting that it decided to keep monetary policy with current parameters until the end of 2020 to collect more macroeconomic data for analysis. I believe they will reconsider their decision in the middle of the year.

Volatility in the euro fell to a record low of 50 points per day. The easing of Brexit uncertainty, the conclusion of a trade agreement between the US and China, as well as negative interest rates of the ECB, should be a powerful driver of acceleration of the eurozone economy.

In 2020, the baseline forecast implies a moderate growth of the pair to 1.1720 in the first half of the year. By the end of the year it is expected to decline to 1.1400. For 20 years, statistics show that January and February are bearish for the euro (13 times and 20). The first two months are to be expected to flat, or weaken. It can be assumed that the strengthening of the single currency will begin from the end of February.

Vladislav Antonov, analyst at Alpari Information and Analysis Center