Although the ECB might initiate rate cuts before the Fed, we forecast fewer ECB cuts. This difference in monetary policy trajectories could favor EUR/USD through the interest rate differential.

Eurozone investors, currently overweight in US assets, might adjust their investment strategies. There's a potential shift towards reducing foreign debt purchases and increasing local asset holdings. This change could decrease the demand for US assets, indirectly benefiting EUR/USD.

We expect EUR/USD to reach 1.1500 by the end of 2024.