The Fair Value of The Euro

As a trader I think that Fair value for the Euro is 1.15/1.20!
We been under value at 0.82 on October, 2001, and now over value at 1.60. the balance line is 1.17.

That’s make the euro over value by 25% against the dollar. While the dollar at fair value against most asia ccys.

Asian currencies have been falling vs EUR with market focused on fall in USD past 6-9 months. While USD has fallen vs both G10, emerging market currencies, EUR has absorbed a very large part of USD decline. Since start of turmoil in July 2007, EUR has risen about 14%. Asian currencies have fallen on average about 10% vs EUR; even “strong” Asian performers like SGD, MYR, TWD, CNY have fallen more than 5% vs EUR on average, though fundamental backdrop for these currencies is stronger than that for EUR. Notes a fair few Asian currencies are managed; while officials are willing to tolerate more gains to combat inflation they “are still not allowing for fast and volatile moves.” Also, EUR often considered safe and very liquid proxy to trade USD decline story. If anything, EUR gains vs Asian FX have led to “more pronounced fundamental imbalances between Asia and Europe”; Asian currencies very undervalued vs EUR: By about 25% according to its valuation framework. Asia also has more favourable external position than Euroland with less reliance on trade to U.S. last few years. Inflation is on rise in Asia, triggering need for tighter monetary policy. Has long TWD vs basket of 50% EUR and 50%.
Goldman Sachs