EUR/USD: A broad USD decline is the key upside risk – Danske Bank
|The EUR/USD pair remains closely linked to global reflationary trends according to analysts at Danske Bank. They see the Federal Reserve as leaning into supporting this. They target EUR/USD at 1.15 in 1-3 months and 1.11 in 6-12 months.
Key Quotes:
“We expect a cyclical uptick in Europe and elsewhere in H2. We have lifted our expectation to EUR/USD as progress on expansive fiscal policies removes break-up risks and shows political union. Short-term optimism in the cross is strongly dependent on (continued) outperformance of banks, industrials, EM currencies and similar. We remain generally negative on EUR/USD with a 12M target at 1.11.”
“At the current level of about 1.13, EUR/USD is quite exposed to renewed turmoil from (or renewed optimism in) Brexit, finalizing the EU budget deal, a mild correction in equity markets or otherwise a renewal of fears from e.g. resurging COVID-19 numbers. A broad USD decline is the key upside risk.”
“The potential for a stronger EUR/USD is highly linked to global reflationary trends. As of today, we view the Fed as being supportive for such.We suggest watching the financial canaries: if DAX, ZAR, BRL, autos, travel or banks enter a correction, EUR/USD will quite likely also move lower. We keep our forecast unchanged at 1.15 near-term.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.