The new low hit by the dollar has prompted international fund managers to shift from U.S.-based bond funds to those within the eurozone in May, Reuters reports. The data come from a monthy Reuters poll of 40 fund managers, which showed that the euro’s rise encouraged the 40 fund managers polled to favor most euro zone assets, particularly fixed income.

Analysts are predicting an interest rate cut from the European Central Bank due to the unprecedented rise in the Euro’s value.

The strength of the Euro, however, is a double-edged sword. While it bodes well for the European-based bonds, some analysts say that European corporate profits will suffer, also affecting equity returns.

On the opposite side of the Atlantic, U.S. fund managers also cut down their domestic bond holdings in May. According to the Reuters survey, they are funneling money into European Debt, and anticipating a slash in interest rates by the ECB.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.