The ECB is likely to leave its key rate unchanged at peak levels for a long time, according to our economists. There are doubts though amongst market participants whether the ECB will stick to its restrictive approach next year too, which is why EUR is struggling to stand its ground against USD at present.

There is also uncertainty regarding US monetary policy. Our economists expect rate cuts next year, as the US economy is likely to cool notably. But there is no clear indication so far, instead, the US economy has turned out to be quite robust. It, therefore, does not come as a surprise that the market remains cautious about betting on significantly lower USD prices.

We are likely to require more clarity about inflation and economic developments to move EUR/USD into one direction or the other. At present, the uncertainty is dominating though and as a result, EUR/USD is likely to remain stuck in a sideways move.