Economists at Nomura expect EUR/USD to extend its slide into year-end. The pair is forecast at 0.90 this winter.
“We expect a further rise in euro area HICP inflation in August, but expect the rise to be less sharp than previous increases. Naturally, for the market watching energy prices soar higher the question is how quickly will this feed through to CPI inflation with government subsidies making CPI inflation artificially low for now. This is why euro area producer prices may stand out more as a true reflection of price pressures and are also our preferred metric for calculating EUR’s fair value.”
“We expect EUR/USD to fall to 0.90 this winter, inflation to climb further to multi-decade highs before peaking, GDP to decline over the coming year and the ECB to first raise rates in response to higher inflation, and then cut next year as the energy-induced recession continues.”
See – Eurozone HICP Preview: Forecasts from five major banks, inflation has not yet peaked