EUR/USD rose to 1.07 after the hawkish ECB surprise. Economists at Nordea expect the pair to stretch higher toward 1.10 over the next month.
EUR/USD seen at 1.13 by the end of 2023
“A high possibility of a new year rally in stock markets (which would favour a weaker USD) together with a rate differential which has moved in favour of the EUR imply a high likelihood for EUR/USD to move even higher than the current 1.06. We believe that from a tactical perspective, EUR/USD is most likely to see 1.10 over the next month.”
“Our 3M forecast of EUR/USD at 0.99 seems too optimistic on behalf of the USD given how markets have changed their view on the Fed compared to the ECB lately. However, we still maintain our downside bias in EUR/USD in 3M to 6M as we see stocks taking a tumble lower on the back of higher rates than markets currently anticipate.”
“Overall, EUR/USD down to the 1.04 area seems more reasonable than 0.99 in the next 3M. Longer out, a successful reopening in China and a pause in rate hikes point toward a higher EUR/USD. We see EUR/USD at 1.13 by the end of 2023.”
EUR/USD declines toward 1.0600 amid risk aversion
EUR/USD has lost its traction and declined toward 1.0600 on Friday after having recovered toward 1.0650 with the initial reaction to dismal US PMI data. The negative shift witnessed in risk mood helps the US Dollar gather strength and weighs on the pair.
GBP/USD struggles to hold above 1.2200 as US Dollar gathers strength
GBP/USD reversed its direction and turned negative on the day near 1.2150. The sharp decline witnessed in Wall Street’s main indexes allows the US Dollar to gather strength as a safe haven against its major rivals and forces the pair to stay on the back foot.
Gold holds near $1,790 after dismal US PMI data
Gold price edged lower after having climbed above $1,790 earlier in the session but remains on track to close the day in positive territory. The benchmark 10-year US Treasury bond yield holds above 3.5%, making it difficult for XAU/USD to gather bullish momentum.