After the euro's shock strengthening following the European Central Bank's multi-faceted easing package announced Thursday, some analysts are suggesting that the U.S. Federal Reserve's strategy has become more important to euro weakness than the ECB.
The lurch higher for the euro, after a brief dip, came after ECB President Mario Draghi hinted that the deeper rate cut into negative territory could be the ECB's last. Initially, market speculation suggested that Draghi had perhaps talked himself into a corner, as he attempted to unpack some of the details of the new complex stimulus deal.
But as investors digested the package and cast an eye over the ECB's new projections, some are suggesting that perhaps Draghi has shelved plans to drive the euro lower for the time being.
"What we are dealing with is quite an interesting shift in ECB's policy priorities. I would love to say that the euro is a sell here, but it maybe is the case that the euro resilience may go beyond that fumble, if you will, with the forward guidance. It was the only meeting in a long time where Draghi didn't really spend any time discussing the euro and he had his chance," head of G10 FX research at Credit Agricole, Valentin Marinov told CNBC.
"This time around it was all about oil. If you look at the ECB staff projections, what used to be an expectation or rather an assumption in their macro scenarios that the euro will be at the 2015 lows for the next 2 or 3 years now seems to be an expectation that has evolved into euro appreciation this year and additional appreciation next year," he added.
As part of the ECB's new easing package, the central bank cut the deposit rate by 10 basis points to a historic low of -0.4 percent and stepped up the pace of quantitative easing (QE) from 60 billion euros ($66.8 billion) to 80 billion euros a month.
The central bank also cut its benchmark interest rate from 0.05 percent to an all-time low of 0 percent and announced plans to extend its bond-buying program to include corporate bonds as well as government bonds, which in effect will make it cheaper for companies to borrow money on the market.
After falling to around $1.0830, the euro surged around 2 percent to its highest level in around 4 weeks, briefly breaking the $1.12 level before settling back down to trade around $1.111 on Friday.
From here, the outlook for the euro is murky. But with such an aggressive easing package, some analysts are still calling for the euro to fall back toward parity, or a one-to-one exchange rate against the dollar.
Goldman Sachs said it was sticking to its 12-month euro dollar forecast of $0.95, beyond parity, even if the focus for the ECB has shifted to credit easing rather than currency devaluation.
This "may be de-emphasizing the role that the exchange rate plays in easing financial conditions," the bank said in a note on Friday.
Meanwhile, Chief Markets Economist at Capital Economics, John Higgins, also states the euro's resilience will not alter his view that the currency is likely to fall towards parity against the dollar later this year.
"That view has been, and continues to be, primarily driven by our forecast that the Federal Reserve will tighten policy much more aggressively than anticipated by the average investor," he said in a research note on Friday.
This shift to credit easing, may also mean a shift away from the "currency war" theme that has dominated foreign exchange markets for much of the last year, as central banks try to devalue their own currencies to help stimulate growth.
"The global currency war is playing an important role. Two factors are at play, the need for co-ordination, that is what the G-20 statement was about. Also Draghi highlighted that negative rates are becoming increasingly costly. Expensive for the bank to implement, so they are starting to hurt the banks and the ECB is relying on the banks to stimulate growth so from that point of view, it has taken a lot of that ECB euro bearishness," Credit Agricole's Marinov added.