A bullish leap of faith in the euro is too dangerous, say economists at ENG. They hope that the pair EURUSD to be between 0.95 and 1.05 for most of the next year.
The markets’ romance with the dollar will continue for a while
“We are bearish on EURUSD until the end of Q1 2023.”
“The recession in Europe means EURUSD could be trading in a 0.95-1.05 range for most of the year, where fears of another energy crisis in winter 2023 and uncertainty in the Ukraine will hold back the euro.”
“The sufficient condition for a EURUSD reversal is the state of affairs between the trading partners. Are they attractive enough to divert funds from USD cash deposits potentially paying 5%? That’s a very high bar and That’s why we would be in favor of a very modest EURUSD recovery in 2023, instead of the “V” shape that some talk about.”
“The arguments for a central bank pivot are stronger for the ECB than for the Fed. We see the ECB tightening cycle has stalled at 2.25% in February, versus almost 3% currently priced by the market for 2023. Add in the fact that world merchandise trade will grow just above 1% next year and the risk of tightening liquidity affecting financial stability, all this suggests that the market’s romance with the dollar will continue for a time.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
