We adjust our projections for EUR/USD to 1.07, 1.10, and 1.12 in three, six and 12 months respectively, up from our previous estimates of 1.05, 1.05, and 1.10. The updated forecasts maintain a year-end expectation of 1.10 but indicate less downside in the short term and a more extended recovery of the Euro relative to the US Dollar beyond the peak.

We reiterate our recommendation for investors to take a long position in EUR/SEK with a target of 12.00. We believe that Sweden faces a more challenging trade-off due to its economy's higher sensitivity to policy rates and particular exposure to the manufacturing sector. This position is seen as a way for investors to protect against the possibility of persistently high inflation and elevated interest rates.