EURUSD is currently trading below the 0.98 level. However, the Westpac economists expect the pair to recover substantially towards 1.07 by the end of next year.
Removal of downside risks related to Europe’s energy supply will push the euro higher
“Although it seems increasingly clear that the growth of activity in the euro zone will exceed that of the US until 2022 and 2023, this is not the main factor in our forecast. It is rather about the elimination of risks to decline related to energy supply in Europe, since the continent’s gas deposits are practically full before winter and the necessary infrastructure to allow the replenishment of reserves until 2023 is already in place”.
“Our central expectation is that the EURUSD rises from below 0.98 currently to 1.07 and 1.14 by the end of 2023 and 2024 respectively.”
“If winter weather turns out to be benign, as the market increasingly suspects, upside risks to the euro could increase in the new year.”
Source: Fx Street
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