Economists at Crédit Agricole outline three key reasons for its bearish outlook on EUR/USD throughout 2024.
Monetary policy divergence
The ECB may engage in more aggressive rate cutting than the Fed in 2024, potentially positioning the euro as an appealing funding currency for investors.
Impact of QT on European markets
The ECB’s accelerated quantitative tightening (QT) measures could expand peripheral yield spreads relative to Bunds, negatively affecting the Euro’s appeal.
Heightened global risk aversion
Deteriorating global growth prospects and US political uncertainties could drive investors towards the USD as a safe haven, particularly in the latter half of 2024.