EUR/USD: Clear upside move to take hold in the second half of the year – MUFG

EUR/USD rallied strongly into the end of last year. Economists at MUFG Bank analyze the world’s most popular currency pair outlook for 2024.

ECB to deliver 125 bps of rate cuts by the end of this year

We are now expecting the ECB to deliver 125 bps of rate cuts by the end of this year. It is one of the reasons why we expect the euro to strengthen only modestly against the US dollar in the year ahead as the Fed is also expected to be active in lowering rates to less restrictive levels in 2024.

Our latest forecasts for EUR/USD show a more neutral profile for the pair in the first half of this year before it adjusts higher in the second half of this year up to towards the 1.1400 level by year-end.