EUR/USD seen at 1.16 on a 12-month view – Danske Bank
|The EUR/USD pair reached 1.23 right after the Democratic win in Georgia but has grinded lower recently, as markets have begun questioning the Fed’s plan to keep rates low for as long as it currently signals. Analysts at Danske Banke see EUR/USD around 1.22 in the firsts quarter, before a move towards 1.16 in 12 months on US economic outperformance in the second half of the year.
Key quotes
“With the Fed leaning into the new narrative of a strong US economy and the high likelihood we will see more US easing, EUR/USD upside risks have faded somewhat, although not entirely.”
“Evidence has also increased that we should indeed expect to see lower Chinese PMIs and thus fading tailwinds for global manufacturing.”
“We shift our 1M EUR/USD forecast from 1.24 to 1.22.”
“Our view of a stronger USD remains primarily centred as a H2 story, with 12M at 1.16.”
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