The Nomura economists expect EUR/USD to extend its decline until the end of the year. The pair is forecast to trade at 0.90 this winter.
Inflation will continue to rise to multi-decade highs before peaking
“We expect a further rise in euro area inflation in August, but we expect the rise to be less sharp than before. Naturally, for the market seeing energy prices rise, the question is how quickly will translate this into CPI inflation, as government subsidies keep CPI inflation artificially low for now, so euro area producer prices may stand out more as a true reflection of pressures on prices and are also our preferred metric for calculating the fair price of the euro.”
“We expect EUR/USD to fall to 0.90 this winter, inflation to continue to rise to multi-decade highs before peaking, GDP to decline over the next year, and the ECB to raise rates first in response to higher inflation, and then cut them next year as the energy-induced recession continues.”
Source: Fx Street
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