EUR/USD: Ukraine war to postpone the take-off above 1.10 to next year – SocGen

FXStreet Insights Team FXStreet

EUR/USD has been stuck in the 1.04-1.08 range since April. Economists at Société Générale expect the pair to remain below the 1.10 throughout the rest of the year.

Fundamentals suggest a higher EUR/USD

“Over the past four years, EUR/USD has tracked the spread of economic surprises between Europe and the US. This correlation recently broke, but the cross used to be around 1.15 when the spread was flat like it is now. Fundamentals thus suggest a higher EUR/USD, which, however, has been stuck in the 1.04-1.08 range since April.”

“The war in Ukraine remains a serious tail risk that should continue to anchor the euro in the second semester, likely postponing the take-off above 1.10 to next year.”

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