Analysts' forecasts for the fortunes of the euro vary as widely as ever, according to an FT.com survey of predictions, but most concur the advent of notes and coins three months ago has made little difference to the pressures facing the currency.

At the end of the first quarter, the single currency is down about 2 per cent against the dollar from its year-high early in January, and at its lowest in February, was down more than 5 per cent.

Click here for table of analysts' predictions

While the currency has gained the acceptance of the 300m eurozone citizens, political strains, economic uncertainty and the sheer strength of the US dollar continue to weigh on the euro's exchange rate.

At the start of the year the single currency rose to $0.9066 after the smooth launch of notes and coins. But "europhoria" was short-lived and the euro gave up all its post-launch gains within a week. Many analysts speculated that the euro's January rally was the latest evidence of a trend which sees the euro's calendar year-high every January. "The euro really needs good domestic news to rally convincingly," said Julian Jessop, European economist at Standard Chartered. "Bad news from the US doesn't do the trick as the market perception is whatever problems the US has, US policymakers will deal with them better than eurozone policymakers would."

Comparisons with the US have been one of the euro's biggest headaches given the apparent success of the US in withstanding a recession and the aftershocks of the September 11 terrorist attacks.

"US productivity growth will continue to surpass that of Europe, with the net result being a significant and sustained influx of capital to the US from European investors," said Mitul Kotecha, global head of FX strategy at Credit Agricole Indosuez.

In comparison with the US, the European Union's compromise in not warning Germany over its budget deficit and its inability to push ahead with structural reforms look sluggish, say analysts.

And upcoming elections in France and Germany, the eurozone's two biggest economies, are expected to delay reform further.

France faces a closely-fought presidential election in late spring and a general election in June. The federal elections in Germany on September 22 are equally difficult to call, with chancellor Gerhard Schroder's position undermined by the weak state of the economy.

"Markets don't like hung parliaments, they like clear majorities, and there's currently a danger in Germany the result will be that close," said Kamal Sharma, currencies strategist at Commerzbank.

The euro's own lack of momentum was a factor highlighted by many analysts, including those with bullish euro forecasts.

US bank Citigroup predicted a stronger euro but emphasised the gains would come from others' weakness.

"Our projections reflect continued yen weakness and a moderate dollar decline as capital flows to the US fall short of the rising current account deficit," said Bob Sinche, head of currency strategy.

And part of HSBC's basis for believing in a stronger euro is also based on a negative US factor.

"Forthcoming Fed tightening will limit the upside for US bonds and equities," said Mark Austin, chief currencies strategist at HSBC. "US equities are still richly valued compared with European stocks on an earnings basis, which should be euro-positive."

While expectations of a euro recovery remain, if muted, even the most optimistic are looking to the US for guidance.

"The euro - its still a dollar story," said one analyst.

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