Synopsis: Financial institution of America reaffirmed its bullish stance on EUR/USD, projecting the pair to achieve 1.15 by the top of 2024, in distinction to the extra conservative consensus forecast of 1.10 for this yr and 1.14 by 2025. BofA’s optimism stems from expectations of a weaker greenback pushed by moderating inflation and anticipated Federal Reserve fee cuts, enabling a shift in the direction of equilibrium in USD worth.

Key Factors:

Bullish on EUR/USD: BofA stands agency on its year-end goal for EUR/USD at 1.15, anticipating many of the forex pair’s appreciation to happen within the second half of the yr. This outlook positions BofA above the present market consensus.
Consensus Comparability: The market consensus pegs EUR/USD at 1.10 for 2024, and 1.14 by 2025. BofA’s forecast extends additional, envisioning EUR/USD at at 1.15 by finish of 2024 and 1.20 in 2025.
Unchanged Core USD Forecasts: BofA’s broader forecasts for the USD towards G10 currencies stay regular. The financial institution anticipates broad USD depreciation in 2024, fueled by declining inflation charges and anticipated financial easing by the Fed.
EUR-CHF Adjustment: The one current adjustment in BofA’s forex forecasts was an uplift in EUR-CHF projections following the Swiss Nationwide Financial institution’s surprising determination to decrease rates of interest.

Conclusion: BofA’s steadfast prediction for EUR/USD to understand considerably by the top of 2024 displays a bullish divergence from the market consensus. The financial institution’s expectations hinge on a broader theme of USD depreciation towards G10 currencies, pushed by moderating inflation and potential fee cuts by the Federal Reserve. This outlook suggests a return in the direction of a extra balanced USD valuation because the yr progresses, significantly within the latter half.

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