The EUR is likely to appreciate somewhat against the USD with a view to the end of the year, once rate cuts draw nearer in the US, according to economists at Commerzbank.

Fed to start cutting rates again in early 2024

“As market concerns subside, the Dollar's ‘safe haven’ property is likely to be less and less in demand, which argues for rising EUR/USD.” 

“Both the Fed and the ECB are likely to end their rate hike cycle in the summer. However, while ECB rates are then likely to remain at their levels, we expect the Fed to start cutting rates again in early 2024. This convergence of monetary policies is a significant advantage for the Euro.” 

“Our target for EUR/USD is 1.12.”