Analysts at Societe Generale provide a bearish outlook on EUR/USD in the near term amidst the deepening European gas crisis.

Key quotes

“As oil prices rose in the run-up to the GFC, both European and US terms of trade suffered, but this time around, the relative effect is completely different.”

“From a US perspective, this highlights the positive impact on the dollar of rising energy prices; for the euro, it just highlights the scale of the challenge confronting the continent.”

“I can’t see a significant rebound for any European currency until we get through the gas crisis.”

“Our current forecasts look for EUR/USD to trough in Q3, in a 0.95-1.00 range, and while that level may be about right, it’s harder now, to see a bounce before the end of the year.”