Investing.com – The Federal Reserve has began its rate-cutting cycle, and Financial institution of America Securities continues to count on modest US greenback draw back going into 2025.
“Though the Fed modestly shocked markets with a 50 bps minimize final week, we see core FX dynamics largely unchanged in G10, with persevering with to float larger,” analysts at Financial institution of America Securities mentioned, in a word dated Sept. 26.
The financial institution sees the US greenback as reasonably overvalued, however the Fed charge slicing cycle would seemingly assist additional attenuate this overvaluation over the medium time period, together with our outlook for a rising EUR/USD.
“We search for EUR/USD to construct on latest positive factors, with our unrevised forecast profile of end-2024 at 1.12 and end-2025 at 1.17,” BoA mentioned.
USD draw back is extra more likely to proceed, the financial institution mentioned, as disinflationary tendencies and a softening labor market help the Fed in a modestly extra accelerated rate-cutting tempo.
BoA expects one other 50 bps minimize at their November assembly and a 25 bps discount in December.
At 10:00 ET (14:00 GMT), EUR/USD traded 0.1% larger at 1.1142, up round 1% year-to-date.
