EUR/USD could challenge 0.90 before settling around 0.93-0.94 – Standard Chartered

EUR/USD is set to move downward in the near-term but economists at Standard Chartered expect the pair to turn back higher over a 12-month period.

Downward pressure on the euro in the near-term

“EUR/USD is likely to weaken over next 1-3 months, potentially testing support around 0.90, before settling around 0.93-0.94.”

“While European gas inventories have reached nearly 85% of capacity, energy security and rationing concerns along with relatively slower pace of rate hikes from ECB are likely to exert downward pressure on the euro in the near-term.”

“Over a 12-month horizon, we expect a reduction in interest rate differentials between US and Europe and a reversal of its current undervaluation to push the EUR higher.”