Credit Suisse now targets EUR/USD at 1.0440-1.0800 range in Q1'23.

"With our EURUSD 1.0610 range top breached, we now shift our expected range low for the next month to 1.0440 (close to 7 Dec low) and additionally anticipate a test of May highs near 1.0800 (our new end-2022 target). This doesn’t change yet our longer-term belief that the USD uptrend will resume in 2023, but we must recognize that US inflation data are validating the rates pricing in the US curve," CS notes.

"In fact, given that a tough recession environment that coincides with an acceptable inflation trajectory could technically allow for 200bp plus of cuts in that time period, it is hard to argue that everything that can be priced in definitely is at this time, leaving still more scope for positioning unwind to proceed," CS adds