Bank of America (BofA) has published its foreign exchange market forecast and expects the EUR-USD exchange rate to reach 1.12 by the end of the year. The bank’s analysts expect most of the euro’s appreciation to occur in the second half of the year, positioning their forecast above the consensus estimate of 1.08 for 2024.
Beyond the euro, BofA’s analysis remains focused on the G4 currencies. The pair is currently trading around the bank’s year-end forecast for 2024. However, BofA noted that there are still risks of intervention in the currency pair.
The British Pound (GBP) is also on BofA’s radar, with the bank maintaining a constructive view on the currency. This optimism is fueled by stronger than expected UK Consumer Price Index (CPI) data. Nevertheless, BofA acknowledges that the upcoming UK general election is likely to dominate the market’s attention in the short term.
BofA’s broader view on the foreign exchange markets includes a forecast for a gradual depreciation of the US dollar for most G10 currencies over this year and the year ahead.
The forecast also points to slightly larger depreciation of the US dollar against higher beta G10 currencies.
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