In January, EUR/USD weakened back after end-2023 rebound. Economists at MUFG Bank analyze the pair’s outlook.
EUR/USD correction lower followed by rebound to new highs
Over the year as a whole, the forward market indicates a remarkably synchronised easing by the Fed and the ECB, which if correct would point to limited scope for yield driven big moves in EUR/USD.
We remain neutral on EUR/USD in H1 but see a slowing US economy emerging, contrasting somewhat with a modest pick-up in Eurozone growth which will allow for EUR/USD to drift higher in H2, although the move will be curtailed by US political risks.
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