EUR/USD Expected to Boom In 2022

The US dollar is expected to stay strong in 2022. EUR/USD and USD/JPY could trade at 1.10 and 120.00, respectively.

Those expectations are based upon the idea that sharper Fed tightening cycle to push the dollar ahead. Assuming that Omicron risks play out closer to the benign end of the spectrum, therefore the sharper Fed tightening cycle could return as a theme in early 2022. This should be good news for the dollar.

In a world where the European and Japanese central banks are late to tighten, or have the biggest cause to pause, the dollar’s gains should largely come at the expense of the low-yielding currencies. Here EUR/USD can trade to 1.10 through the year and USD/JPY potentially as high as 120.