Economists at the Bank of America Global Research expect the EUR/USD pair to remain under pressure in the first half of the year before recovering toward 1.10 by year-end.

Market has once again run ahead of itself

“We warn that the market has once again run ahead of itself, pricing early Fed cuts, with re-pricing likely to weigh on EUR/USD in the short term.”

“We continue to forecast EUR/USD at 1.05 in H1, appreciating to 1.10 by year-end and to 1.15 by end-2024, still below long-term equilibrium.” 

“We assume that the worst of the recent bank turmoil is behind, but we remain concerned about two risks for the EUR in particular: the continued war in Ukraine and possible market pressure on Italy from the hawkish ECB.”