Barclays Plc raised its forecasts for the euro against the dollar, citing central-bank measures that have negatively affected the greenback and helped the shared currency appreciate.
The bank expects the euro to reach $1.35 by the end of 2012, up from its previous forecast of $1.20, according to a research report. Barclays also raised its six-month forecast for the euro to $1.28 from $1.17 and its 12-month projection to $1.22 from $1.15.
"The Fed easing and QE3 made us change our call," Jose Wynne, head of North America foreign-exchange research for Barclays' investment banking unit in New York, said in an interview on Bloomberg Television's "Lunch Money" with Sara Eisen. "They have made a very strong commitment going forward saying that they will keep buying bonds. You should be selling the dollar."
The open-ended nature of the Federal Reserve's planned debt purchases will lead to uncertainty and weigh on the dollar, Barclays said. The European Central Bank's unlimited debt-buying program is intended to make previous monetary easing decisions more effective, which will be a positive for the 17-nation currency, according to the firm.
"Of the major central banks, we judge the Fed's move as the most currency negative," Barclays analysts wrote in a global outlook released today. "Taking the Fed and ECB decisions together, the rally in euro-dollar appears appropriate."
The dollar weakened 0.1 percent to $1.2947 per euro at 12:40 p.m. New York time. The greenback rose as much as 1 percent against the euro on Sept. 20, its biggest gain in a month.
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