Morgan Stanley analyst Stephen Hull says the euro has much farther to fall, but the dollar should strengthen in 2010 and the euro zone may very well disband.
“Having reached our 1.24 target in EUR/USD, we now expect a decline to 1.16 by year-end and for the euro to trade at a discount to fair value (1.17) in early 2011," reaching a trough around 1.12 before recovering later in the year, Hull writes in a note to investors.
Friday, the euro dropped below $1.20 for the first time in more than four years as a Hungarian official's warning about the state of his country's economy underlined fears about Europe's prospects.
The 16-nation currency traded as low as $1.1973 — its weakest level since it bought $1.1920 in March 2006 and well below the $1.2182 it bought in New York late Thursday. (more)
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