EUR/USD has fallen below parity again. The Westpac economists expect the pair to stand at 1.02 by the end of the year, before making a significant rally to 1.12 by the end of 2023.
The forward interest rate spread could provide significant support to the euro
“EUR/USD is forecast to rise only slightly to 1.02 in late 2022, but then more sharply to 1.12 in late 2023 and 1.15 in mid-2024.”
“Although we expect the interest rate differential between Europe and the US to remain significant over the forecast horizon, forward interest rate differentials should narrow in both nominal and real terms as inflation rates tighten. normalize and the risks decrease.”
“With the help now being offered to households in Europe, and rapid moves to diversify away from Russian gas, the real-term interest rate differential could provide significant support to the euro through the first half of 2023, provided when we don’t see a further material escalation from Russia. A rebound in activity growth from mid-2023 will add support to this trend.”
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
