After a surprisingly positive year for the euro, which outperformed despite the currency bloc's sluggish growth and comparatively dovish central bank, the debate over whether the single currency will be able maintain its allure in 2014 is heating up.
According to Kathy Lien, managing director of FX Strategy at BK Asset Management the odds are stacked against the euro this year.
"The most significant risk for the euro is ECB [European Central Bank] easing. European policymakers have said time and again that they stand ready to do more for growth including dropping interest rates if the economy needs it," Lien wrote in a recent note.
(Read more: Euro has sights on $1.40: Charts)
"If the central bank eases at a time when tapering by the Fed [Federal Reserve] is driving U.S. rates higher, euro-dollar could sell off quickly and aggressively," she said, noting that the ECB could introduce another Long Term Refinancing Program (LTRO), especially if growth slows or inflation fails to rise.
Lien forecasts the euro could fall as low as 1.30 against the U.S. dollar this year, 4.4 percent below current levels. She expects the euro will perform worst against currencies whose central banks are looking to unwind stimulus such as the U.S. dollar and New Zealand dollar or countries that will experience stronger growth like the U.K. and Mexico.