EUR/USD: Potential to test 1.20 in the next year – Danske Bank
|EUR/USD has shifted from the 1.18-1.20 range to testing 1.16. Economists at Danske Bank are set to trade a wider interval, 1.15-1.19, as Fed failed to provide a boost. On a three-to-six month horizon, Brexit, Fed, US election and COVID-19 can give test of 1.20.
Key quotes
“A combination of overly hawkish Fed, resurging lockdowns due to the European coronavirus situation and fading economic momentum was not what we expected a few weeks ago. As markets are coming from an already-upbeat starting point, we see the upside risks to EUR/USD as fading. In effect, markets will need to wait for a new upside story.”
“We see EUR/USD staying on the weak side versus recent history as an unexpected vacuum of policy and economic direction has come about. Looking further ahead, next year may still potential provide a new test of 1.20. Overall, do note the scope for USD appreciation due to the current global sell-off will be limited by Fed's response function.”
“In the best case for EUR/USD from here, we see several new EUR-positive factors but this will not be priced before some time. We are thus set to trade a wider interval, 1.15-1.19 and while equities remain weak, downside risk to spot is prevalent. Early next year, things may/should still change for the better.”
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.