Danske Bank: Euro will fall against the dollar in 2023

According to the forecasts of Danske Bank economists, the euro/dollar pair is expected to fall next year.

The U.S. Federal Reserve (Fed) raised its interest rate by 50 basis points on Wednesday, as forecasted. Comments made by the Fed after the hike indicate that the rate is likely to hit higher than 5% next year. The projected rate range is 5–5.25%.

Despite Powell's assurance that the Fed takes into account short-term volatility in financial conditions, Danske Bank believes that easing is still driven by high inflation risks.

Danske Bank economists note the presence of the possible U.S. dollar upside risks in the near future. And since the leading role in maintaining restrictive financial conditions has been given to the U.S. dollar, Danske Bank forecast is reasonable.