Nomura Research maintains a core bearish bias on EUR/USD into year-end.
"The inflation figures will take full focus in Europe next week. We expect a further rise in euro area HICP inflation in August, but expect the rise to be less sharp than previous increases. Naturally for the market watching energy prices soar higher the question is how quickly will this feed through to CPI inflation with government subsidies making CPI inflaton artificially low for now. This is why euro area producer prices may stand out more as a true reflection of price pressures and are also our preferred metric for calculating EUR’s fair value," Nomura notes.
"We expect EUR/USD to fall to 0.90 this winter, inflation to climb further to multi-decade highs before peaking, GDP to decline over the coming year and the ECB to first raise rates in response to higher inflation, and then cut next year as the energy-induced recession continues," Nomura adds.