EUR/USD to stay weak as long as global and especially US inflation remain high – BofA
EUR/USD remains flat for the year. Economists at Bank of America analyze the pair’s outlook.
A sustained rally in EUR/USD would require a shift in the Fed’s stance
As long as global and especially US inflation remain high, EUR/USD is likely to stay weak, with further downside potential during the inevitable hard landing.
A sustained rally in EUR/USD would require a shift in the Federal Reserve’s stance, while for now, the carry trade is also exerting downward pressure on the EUR.
While non-USD EUR crosses can remain strong, further upside may be limited. In the long term, EUR strength will depend on the ECB’s increasingly difficult commitment to the inflation target compared to the rest of the G10.