Research Team at Danske Bank expects that EUR/USD is close to forming a base as in their view, relative rates remain EUR/USD bearish as the Fed is slightly underpriced and the ECB is priced too hawkish.
“However, it appears that clarity with regards to US tax reforms has been postponed towards later in the year and hence is less of a short-term USD positive. We believe that it is most likely that Le Pen will not become France’s next president. Hence, in our base case France’s election will not hinder a gradual rise in EUR/USD. Medium-term, we continue to expect EUR/USD to move higher on the large Eurozone-US current account differential and the undervaluation of the EUR. In sum, we are ‘rolling’ our EUR/USD forecasts predicting the cross at 1.06 in 1M(1.04previously), 1.08(1.05),1.10(1.08)and1.14(1.12).”