Bank of America says that with EUR/USD approaching the year-end target of 1.12, the pair has limited upside:
- Market expectations for interest rate cuts by the Fed and ECB are now fully priced in for 2024
(
I’ll mention that after Powell spoke on Monday, these expectations seemed overblown for the Fed:
- USD rises, stocks fall as Powell rises to GDI and base case to cut 25 basis points
- US dollar moves higher as Powell presses cuts
)
Bua continued:
- EUR/USD should rise again in 2025, which will weigh on dollar weakness.
- “Our hypothesis remains that Fed policy easing amid a soft landing in the US will weaken the dollar from an overvalued level.”
- The target is 1.15 by the second quarter of next year
- Holds a buy now trade with stop loss at 1.10 (up from 1.04 previously)
- The target for the end of 2024 is 1.12
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EUR/USD update:
This article was written by Eamonn Sheridan at www.forexlive.com.