The euro plunged to an 11-year low on Thursday, after the European Central Bank announced that it would begin a 60-euro monthly asset purchasing program. But it could still have a ways to fall.
Brown Brothers Harriman global head of currency strategy Marc Chandler predicts that the euro, which fell as low as 1.1362 on Thursday after trading near 1.4000 in May, is heading below 1.0. That widely watched level is the point at which it will just take a single U.S. dollar to purchase a euro, a condition known in the currency markets as "parity."
"The divergence between the ECB, the [Bank of Japan] easing policy more, and the Federal Reserve—even if you don't fully accept my view that the Fed raises rates in the middle of this year, no matter how you slice it, the Federal Reserve will raise rates well before the ECB and the BOJ—I think that this pushes the euro well below parity next year," he said Thursday on CNBC's "Futures Now. "
"I think about where the euro fell to back in the early part of 2000, 2001, we were down below 0.9. And I think that that's where we should be thinking that we're headed again," Chandler added.
In fact, Chandler maintains that even though the dollar has already made a huge move, "we're still in the early stages of a multiyear dollar bull market."
But at the same time, he throws cold water on the much-ballyhooed idea that we are witnessing a "global currency war."
"I think a lot of people are confusing a metaphor with reality," Chandler said. "This is not a currency war. This is a race to have lower rates to fight deflations. And part of deflation is coming from lower commodity prices. Some of it is coming from weak demand. Some of it is coming from the lack of structural reforms. But I think that we are in a race of low interest rates, rather than a currency war per se."
In fact, the most shocking recent central bank had the impact of dramatically strengthening, not weakening, its country's currency.
When the Swiss National Bank made the surprise move of weakening the Swiss franc's cap against the euro, "it appreciated by over 40 percent in a few hours," he points out.
And while he does expect ECB measures to further weaken the euro, there's a big distinction between its actions and the debasement conjured up by that belligerent metaphor.
"In a currency war, you are just borrowing—or stealing—aggregate demand from another country," he said. "Interest rates stimulate demand for everybody, so it's not a zero-sum game."