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Why 2023 won't wrap up in favor of the Euro: EUR/USD forecast

Commentaries & Views

This summer seemed to hold promise for the euro. The European currency saw a noticeable rise against the US dollar. However, in the middle of July, this growth came to a halt, and the USD began movements to the mark of 1. Let’s explore if the dollar could once again outvalue the euro, as it did about a year ago.

First, take a look at the chart demonstrating how the EURUSD rate has changed since the beginning of 2022. Do you remember (of course, you do) the moments when the USD was ahead of the EUR? It feels like ages ago, but nah, it’s been less than a year. 

Now, pay attention to this summer. The euro gained by 1.12, but it probably marked the peak for 2023 because the trend changed. 

And it’s not only about the EUR, to be honest. The US dollar has gained strength against other major currencies, as shown in the DXY chart.

The USD decreased before the middle of the summer due to expectations that the Fed could adjust monetary policy earlier than other major central banks. But nope, now the Federal Reserve expected to consider such adjustments only in the spring of 2024. Same time, the Chinese economy faced unexpected trouble, requiring government support.

It appeared suddenly that market participants had no alternative to the US dollar. Investors preferred the USD to the EUR and most other majors. The safe haven is still a safe haven, and people have made their choice. 

Therefore, analysts expect that the EURUSD will hover around 1.09 in the following months and then might even reach 1.06. But there are no drivers capable of pushing the US dollar closer. At least for now. 

Then 2024 will come. You might find this hard to believe, but the USD is likely to weaken. The Fed will lower the interest rate, European and emerging market economies might show better results. So, if you are a USD-crash believer, be patient, and you may be rewarded.

Patience is a valuable quality for every investor and trader. It allows keeping a head clear and make thoughtful decisions. Remember to conduct your own research before every trade – even if you have heard of a guaranteed profit.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.