USD to EUR Forecasts
Divergent interest rates and energy costs between the eurozone and the US have dramatically impacted the euro in 2022.
Updated: Dec 05, 2022 
BER Research
BER Research Divergent interest rates and energy costs between the eurozone and the US have dramatically impacted the euro in 2022.
BER Research In early December the dollar dropped to 94 against the euro after rising to a 20-year high of 1.04 in late September, as markets predict that the aggressive interest rates hikes by the Fed to reign in inflation may be over.
However, due to the Eurozone’s reliance on gas from Russia, the euro will remain vulnerable while Putin’s so called Russian ‘special military operation’ in Ukraine continues.
| Date | USD/EUR | Change | Period |
|---|---|---|---|
17 Jan 2023 | 0.9267 | 0.7% ▼ | 2 Week |
02 Nov 2022 | 1.0190 | 9.7% ▼ | 3 Month |
31 Jan 2022 | 0.8905 | 3.4% ▲ | 1 Year |
01 Feb 2018 | 0.7993 | 15.2% ▲ | 5 Year |
02 Feb 2013 | 0.7340 | 25.4% ▲ | 10 Year |
05 Feb 2003 | 0.9230 | 0.3% ▼ | 20 Year |
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The euro has recovered since falling below the US dollar exchange rate in September, aided by lower energy prices, reduced recession fears, and a more aggressive European Central Bank. The euro has risen 13% over the past 3.5 months, aided by a weaker US dollar.
Economists expect the US dollar’s strength over the past year to reverse in 2023 as the Fed’s interest rate hikes cycle to an end.
A clear reflection of this is that the US Dollar index (measure of the USD strength against basket of currencies) which has pulled back from 20 year highs.
In 2022 the Ukrainian crisis and its risks for European energy supplies had pushed the euro down decades lows near and even below parity against the US dollar.
But to be fair, the market’s expectation for a rise in US inflation and thus interest rates has pushed up the USD exchange rate against most currencies.
The European Central Bank in October again raised its benchmark deposit rate, this time by 75 basis points, taking the EUR deposit rate to 1.5%, and indicated further rate hikes are to be expected. These recent hikes are the first in over a decade for the Eurozone single currency.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.