The US Dollar (USD) has fallen since last week’s milder-than-expected inflation data. Nonetheless, economists at UBS expect the greenback to stay on a solid foot, for the time being, dragging EURUSD and GBPUSD down to 1.00 and 1.10, respectively.
Near-term risks remain tilted toward a stronger US Dollar
“We think the near-term risks remain tilted toward a stronger US Dollar (USD). We continue to rate the greenback as most preferred in our foreign exchange strategy, alongside the Swiss Franc, another safe-haven currency.”
“We think there is a high chance that risk aversion will return and recommend investors prepare for another drop below parity for the Euro (EUR) and Cable to fall toward 1.10.”
“We also recommend selling upside risk in EURUSD and the downside risk in the US Dollar versus the Yen as a short-term yield-enhancement strategy, given the pick-up in foreign exchange volatility.”
EURUSD could be trading in a 0.95-1.05 range for most of 2023 – ING
A bullish leap of faith on the Euro is too dangerous, in the opinion of economists at ING. They expect the EURUSD pair to be in the 0.95-1.05 range for most of the next year.
Market’s bromance with the Dollar will continue for a while yet
“We are bearish on EURUSD into the end of the first quarter of 2023.”
“Recession in Europe means that EURUSD could be trading in a 0.95-1.05 range for most of the year, where fears of another energy crisis in the winter of 2023 and uncertainty in Ukraine will hold the euro back.”
“The sufficient condition for a EURUSD turnaround is the state of affairs amongst trading partners. Are they attractive enough to draw funds away from US Dollar cash deposits potentially paying 5%? That is a high bar and why we would favour the EURUSD 2023 recovery being very modest, rather than the ‘V’ shape some are talking about.”
Euro to US Dollar could retrace the majority of the 2021-2022 decline – BofA
Economists at the Bank of America Global Research discuss EURUSD's technical outlook. In their view, a dip towards parity followed by a bounce to 1.0350/75 would confirm a head and shoulders top.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats from 1.0900 as DXY recovers modestly
EUR/USD erased daily gains during the American session as Wall Street moved off highs. The deterioration in market sentiment is helping the US Dollar look less weak. As a result, the pair is moving further away from the seven-week high of 1.0929 toward 1.0850.
GBP/USD stabilizes around 1.2300 on BOE day
Following a pullback with the initial reaction to the Bank of England's policy announcements, GBP/USD has regained its traction and climbed above 1.2300. The pair remains on track to post gains for the second straight day as the US Dollar struggles to find demand.
Gold: XAU/USD hits fresh highs above $2,000 as US yields resume slide Premium
Spot gold rose further during the American session, climbing again above $2,000/oz, despite the modest recovery of the US Dollar. US yields resumed the decline, boosting the yellow metal. The US 10-year yield fell to 3.42%, the lowest since Monday.
Breaking: Terraform Labs founder Do Kwon arrested in Montenegro: Interior minister
Terraform Labs' founder Do Kwon is arrested, according to Minister of Interior of Montenegro Filip Adzic. This is a developing story and will updated
Ford (F) Stock News and Forecast: $3 billion EV loss leads shares to advance
Ford (F) stock is demonstrating on Thursday exactly why automotive C suites are pivoting to electric vehicles. It is not because of the environment or due to easy profits. It is because the market likes it.