The beginning of the invasion of Ukraine which put the supposed currency “safe havens” in focus. First and foremost, of course, was the US dollar. Economists at Deutsche Bank expect the greenback to remain supported in the near-term but forecast the EUR/USD pair moving upward to the 1.15 mark in 12 months.

EUR will strengthen especially in the second half of the year

“The USD is likely to remain supported in the short-term due to safe-haven demand.” 

“While we now expect the ECB to hike less than initially thought as it tries to maintain favourable financing conditions in the region, the risk premia that have been baked into the EUR recently should reverse at least partially over the coming twelve months. In addition, the safe-haven flows into the USD are likely to moderate.”

“We think that the EUR will strengthen especially in the second half of the year, however, it may not be able to reach our pre-conflict forecast of 1.20. We now expect the EUR to trade vs. USD at 1.15 by end-March 2023.”