Bank of America (BofA) has released its forecast for the currency market, predicting that the EUR/USD exchange rate will reach 1.12 by the end of the year. The bank's analysts expect most of the euro's appreciation to occur in the second half of the year, and placed their forecasts above the consensus estimate of 1.08 for 2024.
In addition to the euro, Bank of America's analysis remains focused on the G4 currencies. The pair is currently trading around the bank's year-end forecast for 2024. However, Bank of America noted that there are still risks to intervention in the currency pair.
The British pound is also on Bank of America's radar, as the bank maintains a positive outlook on the currency. This optimism is fueled by stronger than expected UK CPI data. However, Bank of America admits that the upcoming UK general election is likely to dominate market attention in the short term.
Bank of America's broader view of currency markets includes expectations of a gradual decline in the value of the US dollar across most G10 currencies throughout this year and into next.
Expectations also point to a slightly larger depreciation of the US dollar against the higher beta G10 currencies.
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