Nordea: EURUSD is likely to hit 1.10 next month and 1.13 by end of 2023

The EURUSD climbed to 1.07 after the European Central Bank (ECB) delivered its interest rate hike. Economists at Nordea expect EURUSD to go up to 1.10 over the next month. In their views, it will hover around 1.13 by the end of 2023. 

Economists see a good chance of the pair surging above 1.06 amid the traditional New Year's rally in stock markets, which tends to lead to a decline in the U.S. dollar. They note that EURUSD could trade around the 1.10 level next month. 

Earlier, their forecast for three months implied EURUSD would be at 0.99. However, it seems too optimistic for the U.S. dollar now, given how investors have changed their view of the Fed compared to the ECB. Despite this fact, they still see EURUSD declining in three to six months as stocks are likely to fall amid rate hikes.

They believe that EURUSD is more likely to slide to 1.04. China's economic recovery and a pause in rate hikes could drive the pair in the long term. They expect EURUSD to hit 1.13 by the end of 2023.