Currency strategists at Wells Fargo expect that this year the greenback will add 5% versus the single currency and 11% against yen.

As we get past the quantitative easing and possibly through the European debt crisis, US economy is likely to rebound and outperform the European and the Japanese ones.

In the first part of 2011 the trade’s likely to be very volatile: US QE will be potentially negative for dollar, while the European debt will put pressure on euro. Towards the end of the year clearer trend of selling EUR/USD will appear.

The pace of euro’s decline, however, slows down. The specialists expect some resolution of the euro crisis this year. As an example, the analysts cited the events of last May when the comprehensive bailout package was developed and euro manage to rise from June’s low to November’s high. However, as a lot of local woes in the euro area remain, the economists see euro losing at least 5%.

According to Wells Fargo, global currency tensions are going to stay in place this year as well. Brazil, Indonesia and other countries are trying to arrange capital controls to fight rising capital inflows. For example, 100 billion dollars came to Brazil over the last 5 months. The strategists say that the currency measures won’t be enough to curb those inflows and stem the overall uptrend of the emerging market’s currencies.



Chart. Daily EUR/USD

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