Chief Analyst at Danske Bank Christin Tuxen sees EUR/USD heading to the 1.18 area within a year’s view.
“Political risks have shifted from the eurozone to the US and have induced a level shift in the cross recently”.
“With the ECB set to be side-lined in coming months by a sustained deterioration in the inflation outlook, the euro should be vulnerable to a likely loss in cyclical momentum in the Eurozone”.
“A Fed determined to move on with policy normalisation should lend some support to the USD near term, but we stress that the significant move to watch out for on a 12M horizon will likely be fuelled by an ECB shift away from further easing”.
“Longer term, we thus continue to emphasise that fundamentals remain supportive. We still maintain that risks are to the downside near term and are merely rolling our longer-term forecasts to target the pair at 1.11 in 1M, 1.09 in 3M (unchanged), 1.12 in 6M (prev. 1.11) and 1.18 in 12M (prev. 1.16)”.
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