According to the economists at CIBC Capital Mercados, EUR/USD could test December 2002 lowsas expensive natural gas prices and ongoing supply threats mean the eurozone faces heightened risks of a recession, which will weigh on the euro going forward.
Recession risks will weigh on the euro
“Expensive natural gas prices and continuing supply threats mean that the eurozone faces elevated downside risks“.
“A data-dependent ECB could seek further tightening at its next meeting. However, Recession concerns and fragmentation risks, due to rising credit concerns, mean that the EUR/USD low of early December 2002 at 0.9863 is still in sight.”
Source: Fx Street
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