A snippet from Westpac from a much longer report, in summary on what to expect from the European Central Bank and EUR/USD ahead.
WPAC point to inflation forecasts from the ECB that justify little prospect for a rate hike until at least 2024. And its probable that QE asset purchases will be required for the entire time, although at a slower rate.
Projections are:
- By the end of 2022 ... 1.155 to 1.17 for EUR/USD
- end of 2023 EUR/USD back to 1.15
WPAC note also the risks to euro:
- in both the near and medium-term are to the downside given the inflation dynamics at play and the persistence of slack in the Euro Area labour market; these factors threaten to offset the benefit the currency stands to receive from the global recovery.
