New Delhi

In Trump trades, the Dollar's surge is a strong narrative playing out compared to broader and cross-asset performances. The long-term story is bets in favour of the greenback. On the other hand, the Euro is now projected to take a big hit.

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After the US election, currency experts are reworking their predictions for the Euro and now predict that it will fall towards dollar parity. Parity means 1 euro equals one Dollar, which is a U-turn from months when many were raising the outlook for the common currency.

At least ten institutions have lowered their euro calls in the last week. Options wagers reveal that traders like betting against the Euro. This is not just against the Dollar but currencies on the other side of the exchange rate, too. The rupee is one of the top examples.

The euro-rupee trade is being driven by opposing growth views in favour of the Indian currency. The Euro is being hurt by extreme political and financial chaos in Germany. The country is known as the growth engine of the eurozone.

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The currency market is shifting in response to speculation that Trump is likely to plank his economic agenda. The expected trade taxes would harm Europe's export sectors during a period of political instability in its main economies. As a result, many investors are abandoning the Euro. The single currency has already fallen about 3 per cent since Trump's triumph, approaching its lowest point this year.

Mark McCormick, the global head of FX and EM strategy at TD Securities, expects the Euro to fall to $1.03 by the time Trump takes office in January. He said, "This is the worst-case scenario you can think of for the euro." McCormick added that parity "is absolutely in play," after that, as the "red wave scenario" increases, the risks of getting to one Euro equals one Dollar.

Investors are already hedging their bets for a lower euro, and their holdings have undoubtedly expanded since then. Positions have ballooned since Trump's landslide win. However, not everyone agrees with euro-dollar parity calls.

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Some analysts are not convinced that the Euro will fall as far as parity. Amundi points out that the market is already heavily tilted in favour of a weaker euro. Analysts agree on stronger dollar bets but are sceptical about parity calls.