ING analysts forecast US dollar and euro parity throughout most of 2023.
“The main conclusion we drew in our currency forecast for 2023 was that a repeat of the dollar’s dominant trend next year is unlikely,” according to the review.
As noted by analysts, everyone in the foreign exchange market is concerned about whether the dollar has peaked. Data on some weakening of inflation in the U.S. and hints at easing the “zero tolerance” policy on COVID-19 in China have combined to cause the U.S. national currency has fallen by about 8% from the highs of the end.
Those in favor of continuing the dollar’s decline are fully focused on the Fed’s actions and its reversal before a full-blown cycle of monetary policy easing.
“We certainly agree that a dovish reversal at the Fed – which will eventually lead to the start of a decline in short-term government bond yields – is a necessary condition for the dollar to fall,” the survey says.
However, it also requires that investments in Europe and Asia become attractive enough to take money out of dollar deposits, experts believe.
“It remains questionable whether any of these conditions will be met in 2023, and we remain skeptical that the euro/dollar pair can maintain gains above the 1.05 level,” the report said.
