The EUR/USD points lower in the short term. The euro should only start to recover when investors bet more and more on the end of the crisis next year, according to economists at Commerzbank.
ECB rate hikes still lag Fed’s
“The determined tightening of monetary policy and the amazing strength of the US economy make the dollar the currency of choice for international investors.”
“For the euro, downside risks remain dominant for now: ECB rate hikes remain lower than Fed’s. ECB is perceived as less determined in fighting inflation. This tends to weigh on the single currency. In addition, the energy crisis will continue to be a weight factor for the euro in the coming months.”
“For 2023, we expect EUR/USD to recover as the energy crisis wears off and the eurozone growth outlook brightens. In addition, the Fed is likely to cut its interest rates slightly again due to the US recession, which would further reduce the gap between monetary policies.”
Source: Fx Street
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