The eurozone is entering a recession and economists at ING expect a deeper downturn over the winter months. Therefore, the EUR/USD pair is set to tumble toward the 0.90 level.

Potential turnaround in 2Q23

“Three-quarters of negative growth in the eurozone into 2Q23 and a still hawkish Fed is a bearish cocktail for EUR/USD.”

“EUR/USD is not particularly cheap and a pick-up in gas prices this winter will keep the eurozone trade balance under pressure. This could see the pair falling towards the lower end of a 0.90-0.95 range over the next three to six months before a potential turnaround in 2Q23 if the Fed is more dovish and both the US and the eurozone exit recession.”