OCBC forecasts EUR/USD falling below 1.10 in the near term, driven by persistent US economic strength and AI-related market volatility, before a potential recovery in the second half of 2027.
OCBC strategists anticipate a near-term decline for the EUR/USD pair, projecting a potential drop below the 1.10 level. This bearish outlook for the first half of 2027 is driven by the expectation that sustained US growth and persistent inflation premia will keep the USD supported, exacerbated by ongoing AI-related uncertainty and elevated energy costs.
OCBC strategists expect the pair to remain under pressure, potentially dipping below 1.10.
The USD is supported by sustained US growth, inflation premia, and market uncertainty surrounding AI.
OCBC strategists project the US Dollar will maintain broad support through the first half of 2027. Elevated energy prices and ongoing uncertainty surrounding artificial intelligence investments are expected to sustain US growth and inflation, putting downward pressure on the Euro.
The bank cites elevated energy prices and uncertainty regarding AI investments as key factors sustaining US growth and inflation premia.