Short term prediction of DXY market

12 paź 2023

We have previously noted that there is no consensus within the ECB's leadership on future monetary policy. This was further confirmed by ECB Executive Council member Isabel Schnabel, who countered Peter Kazimir by stating that further interest rate hikes may eventually be necessary. She added that while the ECB does not currently foresee a deep recession, “we cannot rule out the possibility of a recession” in the future.

If the prospect of higher Euro borrowing costs remains uncertain, interest rate cuts at this stage are certainly not on the table. This was confirmed on Thursday, October 5, by ECB Vice President Luis de Guindos, who stated that discussions on interest rate cuts are premature. Since the Federal Reserve also has no plans to turn dovish from its hawkish stance, the current interest rate differential is 5.50% for the dollar and 4.50% for the Euro gives a certain advantage to the US currency. The Reuters expert consensus predicts EUR/USD will continue to fall to $1.0400 in October, with 1 in 20 experts surveyed predicting a 1:1 ratio. However, analysts predict that EUR/USD will gain around 6% next year.