We maintain the strategic case for a lower EUR/USD based on relative terms of trade, real rates (growth prospects) and relative unit labour costs. 

In the near term, we also expect the current general USD appreciation to continue, as the US economy remains on a better footing. Furthermore, we think there are risks to the ongoing disinflation and soft landing narrative. Any deviation from that narrative could cause risk-off events, likely benefitting the USD in most cases, e.g. if US inflation surprises to the topside during Q3.

Forecast: 1.08 (1M), 1.07 (3M), 1.06 (6M), 1.03 (12M)