Bennie Kincaid 
As of today EUR/USD exchange rate: is 1.06202. Analysts have said that U.S. inflation intensity will play a decisive role in determining the exchange rate in 2023.
Besides inflation, the timing of the announcement of the new U.S. monetary policy also holds an important role.
That factor that can negatively affect the currencies is the emergence of global economic recession.
Experts are also asking questions about where all these factors will play an important role.
One of the biggest concerns is Euro-economic zone is ready to take the strain. Only time can answer this question.
But recently, encouraging news is emerging that Euro-Zone capital gains are seeing much-needed improvement.
Moreover, risk conditions in the Europe market will be the key decisive factor for the strength of the Euro.
However, the aftermaths of the Russia and Ukraine war can further intensify the economic crisis in Europe.
Institutions are divided over the Current Uncertainties of Market
Central banks across the globe are divided over the current market conditions. Specific sets of bank officials believe that the expected rate hike is likely to weaken the USD.
The official statement of HSBC bank concluded, “The expected hikes and preparations of Feds of imposing strict monetary provisions are likely to send USD to further plunge in its price. “
Another group of experts said that strict monetary policy for a longer period could damage the global economy, and currencies across the globe might fall apart.
Furthermore, the recent Euro to Dollar exchange rate support will decrease due to the intense Fed monetary policy.
A well-reputed institute ING talked about the EUR/USD exchange rate. According to ING exchange rate will dip back to its low at 1.10 by the end of 2023.
The global economic recession and potential energy crisis will not let the currency market experience any long-term sustainability.
U.S. Inflation Trends Holds the Utmost Importance
The most recent announcements have seen a bit of relaxation in the inflation intensity. The headline inflation rate has declined from 9.1% to 7.1%. The core rate inflation has reduced from 6.6% to 6%.
If overall inflation goes down further in 2023, the worldwide economy will see a significant boost in the market. This will also strengthen the EUR/USD exchange rate.
Moreover, this will ease the pressure on the Central Bank of U.S reserves, and the bank will show relaxation in its monetary policy. Lower inflation will also lead to higher spending power.
The Officials of Goldman Sachs have already voiced that the two previous indicators showing relatively lesser inflation have slowed down the Feds’ price rate hikes.
If investors feel confident about the lower inflation, this will ease the selling pressure on the USD. But if inflation increases, the economic outlook of 2023 will be different.
MUFG’s official statement concluded that chances are high for the USD to stay weak even in 2023 because the technical indicator of the USD is not showing any bullish run.
The overall market sentiment is also bearish about the USD.
Risk Conditions Are Key for EUR/USD Exchange Rate Gain
USD and Euro both are searching for gain as 2023 is around the corner. USD investors are hoping for weak equities so that the USD can gain significantly. In contrast, Euro will benefit if the bourses advance.
Investors might tilt their shift if the global equity markets continue to rise high amid the worldwide recession rumors.
Rather than investing in the money market, they will prefer equity markets. This will result in weaker money markets and stronger equities against the currencies.
Currencies are less sensitive to rumors and rely heavily on technical indicators and economic numbers.
As risk conditions rise, experts have low hopes for any bullish trend. On the other hand stock market is showing significant signs of bulls as 2023 is approaching fast.
As of this writing, the increase in EUR/USD exchange rate depends on the economic indicators and how the Feds plan to control them.
