(Bloomberg) — The euro is headed for its longest losing streak since its inception on bets that the European Central Bank is raising interest rates.
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The currency was falling for a ninth-straight week, the biggest decline since its inception more than two decades ago. After peaking in mid-July, it has fallen more than 5% against the dollar and is currently trading at its lowest level since March.
Traders have been spending the euro for the past two months on bets that the ECB will struggle to further tighten monetary policy amid a worsening economy. That view was boosted this week when President Christine Lagarde proposed a 10th hike and signaled that a new peak had been reached.
“The ECB has given dollar bulls another reason to short the euro,” said Deepak Shah, head of G-10 FX options trading at Nomura Holdings Inc. dollar, but compared to other currencies.
Read more: The European Central Bank’s rate hike is over
Hedge funds have turned the most negative on the euro since the start of the year and analysts are revising their year-end forecasts for the currency. The median forecast sees the euro ending the year at $1.09 versus $1.12.
The euro fell 0.4% this week to $1.07, recovering some losses in Friday’s trade. The common currency rose 0.2% on the day.
Shaun Osborne, managing director of foreign exchange strategists at Scotiabank, said it is likely to stay above $1.06 ahead of the Federal Reserve’s decision next week.
–With help from Anya Andrianova.
(Generally updates markets, adds commentary at end.)
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