According to the strategists westpacthe economic and political costs of eliminating dependence on Russian energy are likely to weigh on growth in the EU and the euro in the second half of 2022. Therefore, the EUR/USD could test 2017 lows at 1.0340/50.
Eliminating dependence on Russian energy would reduce EU growth by 3% in 2023
“According to the IMF, removing dependence on Russian energy would reduce EU growth by 3% in 2023. This growth strain will continue to weigh on the EUR.”
“A deal to cut oil imports is expected this week, but the risks are that an aggressive embargo could see Russia restrict gas exports in retaliation and thus increase the EU’s energy crisis.”
“Unless the euro can quickly recover levels above 1.07, it will remain at risk of further sharp declines to retest 1.0340/50 (2017 lows) if not the 1.0200-50 area.”
Source: Fx Street
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