Euro Wild Ride to ’06 Low Shows Risk Forecasts Undershooting By Kevin Buckland and Hiroko Komiya Jan 5

The euro’s stunning start to the week highlights the risk that currency bears will repeat the mistakes of last year by predicting too conservative a drop in 2015. The single currency slumped to $1.1864, the lowest since March 2006, at 7 a.m. Tokyo time. The drop of as much as 1.2 percent from its previous close, which analysts said wasn’t prompted by any fresh news, put the 19-nation euro within reach of the median estimate of $1.18 for this year-end among more than 50 strategists surveyed by Bloomberg News. Trading patterns suggest the euro-dollar pair, the world’s most-traded, could reach the 2005 low of $1.1640 if it closes below $1.18 this week. The euro added to its biggest annual decline since 2005 amid speculation the European Central Bank is closer to starting large-scale government bond purchases, while the Federal Reserve prepares to raise interest rates from a record low near zero. ECB President Mario Draghi last week gave his strongest hint yet that quantitative easing could be imminent, saying policy makers must act against the risk of deflation. To contact the reporters on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net; Hiroko Komiya in Tokyo at hkomiya1@bloomberg.net