In November, significant downside risks to our November forecasts materialised, with growth concerns and rising US yields pushing EURUSD down from 1.16 to the 1.12 level. Growth concerns arose as some eurozone countries went into light lockdowns while more restrictions are likely to follow, and at the same time increased inflation fears caused market pricing for the Fed to become more aggressive. To account for these developments, which are likely to remain in play until year-end, we have downgraded our EURUSD forecasts. While this is most visible over our shorter-term forecasts given the near-term growth shocks, we have downgraded our EURUSD forecast over the whole horizon to account for the risk of more aggressive Fed normalisation in 2022.
You can read our EUR Update now:
Author: Ima Sammani, FX Market Analyst