The stage is set for continued dollar strength. In the view of economists at Nordea, EUR/USD will continue lower and bottom at 0.93 around the start of 2023.

USD will continue to do well in the months to come due

“We have long been in the USD strengthening camp and see no reason to change our view yet. We believe the USD will continue to do well in the months to come due to the hawkish Fed conducting the fastest rate hikes in decades, a resilient US economy, and USD’s safe haven in these troubling times. This will bring EUR/USD to 0.93 during Q1.”

“Our take is that the current dollar strength will not stop until the Fed accomplishes bringing inflation down so it can relax its aggressive policy tightening or we see a clear improvement in the global growth outlook.”