UBS are looking for the US dollar to weaken, citing the “steady” fallback in global inflation, and that price pressure is easing in the US faster than in Europe.
Analysts at the bank point to energy subsidies to consumers in Europe meant inflation was slower to rise there, but now it will also be slower to fall. This should lead to a narrowing of interest rate differentials with the US, and making yield from Europe sought by investors rather in the US.
UBS is forecasting EUR/USD to 1.18 by June next year.
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EURUSD daily chart
This article was written by Eamonn Sheridan at www.forexlive.com.
