EUR/USD clings to modest daily gains above 1.1150 after managing to post impressive gains in the previous two days. Although economists at ABN Amro expect the dollar to enjoy less upside against the euro, they still forecast the world's most popular currency pair to sink toward 1.05 by end-2022.

Widening rate spread should still support the dollar versus the euro

“We now expect investor sentiment to be cautious as opposed to negative, and as a result, we think that there is less upside for the dollar versus the euro. However, the widening rate spread should still support the dollar versus the euro.”

“The eurozone economy will continue to be much more negatively affected by the Ukraine war than the US economy. So we are still positive on the US dollar versus the euro, but we see less upside than the parity we indicated a few weeks ago.” 

“Our new year-end forecast for EUR/USD is 1.05.”