EUR/USD: Fundamentals still favor the dollar – Danske Bank
|Analysts at Danske Bank forecast the EUR/USD pair at 1.13 in a one-month period, at 1.12 in 3M and at 1.10 in 12M. They see downside risks to these forecasts.
Key Quotes:
“Fed focuses on starting rate hikes and asset purchases will finish by Q1. This will continue to shift the market’s attention towards USD on a theme of monetary divergence vis-à-vis EU. Such upside risk is amplified by the dollar rising from low levels.”
“We keep our EUR/USD forecast at 1.10 in 12M and see downside risks to this. This reflects our view that market themes are increasingly pro dollar. The manufacturing cycle is clearly slowing but central banks need to tighten to catch-up with inflation pressures and this is quite negative for EUR/USD, especially at current levels.”
“The key risk to see EUR/USD above 1.20 is seeing global inflation pressures to fade. However, ‘transitory’ has substantially lost credibility and we are likely to see a further EUR-negative environment as manufacturing growth slows down. The risk to take EUR/USD below 1.10 is a scenario where central banks tighten further amid a cyclical slowdown, akin a scenario like seen in early 80’s.”
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.