Normally, November and December are soft months for the Dollar. This year, however, it is hard to see the Dollar giving back its gains before year-end.

Given our house view that a US slowdown is more likely in the next quarter rather than this one, we therefore expect EUR/USD to end the year around this 1.05/1.06 area and USD/JPY to end the year not far from 150. Into 2024, however, we expect the short end of the US curve to start moving lower ahead of Fed easing next summer and the Dollar to turn lower.

Our forecast for a Eurozone recession, a difficult return of the Stability and Growth Pact, and the ongoing threat of a geopolitical spike in oil prices present downside risks to our view of a Fed-driven rise in EUR/USD to 1.10 next summer and 1.15 by year-end 2024.