Global 2022 Outlook - Still battling headwinds (Part 1)

What the desk is arguing

The desk posits that the global economic recovery is on a fragile path, influenced heavily by ongoing policy support and the pace of vaccine rollouts. Per the full note from Standard Chartered, this uneven recovery could create volatility in currency markets as different regions respond to economic conditions at varying rates.

Supporting this view, the note highlights that while some economies are rebounding strongly, others lag significantly, which could lead to divergent monetary policy trajectories. This is particularly relevant as central banks reassess their stances in light of inflationary pressures, with the potential for rate hikes in some jurisdictions while others maintain accommodative policies.

Where it sits in our coverage

Our consensus target for the EUR/USD is 1.075, with a range from 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This view aligns with jpmorgan, which sees a stronger euro as the recovery progresses, while it diverges from bofa, which anticipates a weaker euro against the dollar, reflecting a more cautious outlook on the recovery.

How other firms see it

Firms like jpmorgan and citi are aligned in their bullish outlook on the euro, suggesting that the recovery will support a stronger currency. Conversely, bofa holds a contrary view, expecting the euro to weaken due to persistent economic challenges in the Eurozone.

Key indicators to watch include the upcoming ECB meeting and U.S. inflation data, as these will likely influence the EUR/USD trajectory and reflect central bank policy adjustments.

What the calendar says

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