We continue to expect the US economy to slide into recession in 2024 and the Fed to cut its key interest rate by a total of 150 bps in response. However, as the market still seems confident that the US economy will manage a ‘soft landing’, we, therefore, expect the EUR/USD pair to rise to around 1.12. 

The EUR should also receive a further tailwind if it becomes clear that the ECB will cut its key interest rate later and less sharply than the Fed in view of persistently high core inflation. 

Towards the end of the forecast horizon, however, we expect the EUR to weaken moderately again if inflation in the Eurozone is perceived as a persistent phenomenon.

EUR/USD – Dec. 23 1.06 Mar. 24 1.09 Jun. 24 1.12 Sep. 24 1.10 Dec. 24 1.09 Mar. 25 1.08