💶 Euro Seen Falling Back to $1.05 This Year: BofA G10FX Strategy

Economic growth divergence between the U.S. and the EU, and monetary policy tightening from the Fed is seen keeping EUR under pressure vs USD. See EUR/USD falling back to 1.15 to the dollar in 2022. Even if the war does not escalate in Ukraine, the truth is a lot of damage has already been done to the euro zone economic outlook. As long as the war continues, we believe the risks to euro-dollar are to the downside. Basically, the U.S. economy is overheating while the euro zone economy is being hit by negative shocks. See Fed terminal rate at 3.25% vs ECB terminal rate of 0.75%. - BofA G10 FX Strategy via Bloomberg TV