According to analysts from Danske Bank, the EUR/USD pair is set to remain elevated in coming months. On a long-term perspective, they see the US outperforming the Eurozone and expect fading support to the euro from the credit-driven Chinese economic boost. They forecast EUR/USD at 1.20 in a three month perspective and at 1.16 in twelve months.
Key Quotes:
“Since the introduction of new lockdowns in Europe, we have seen a tapering in indicators of domestic demand. External demand (exports) and the manufacturing sector remain tailwinds for Europe, notably demand from Asia. We are starting to see a small peak in the expansion of demand from China but we have moved closer to EU fiscal support (the EU budget) and we may also see a (small) fiscal package from the US in Q1. In our view, the latter two factors and the potential for a coronavirus vaccine will underpin a slow but continued economic rebound in 2021.”
“The ECB is very likely to add further support at its December meeting but we do not believe it will lower interest rates or substantially change the economic path that we are already seeing for Europe. This is slightly EUR negative.”
“The combination of positive progress across US fiscal policy, Brexit, the coronavirus situation and global growth may culminate by year-end. If so, we could see a new test of 1.20. In 6-12M, we see EUR headwinds from valuation and a fading Chinese credit cycle. Note that December holds an unusual number of events that we expect to define risks and direction for EUR/USD as we go into 2021.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD favours extra retracements in the short term
AUD/USD kept the negative stance well in place and briefly broke below the key 0.6400 support to clinch a new low for the year on the back of the strong dollar and mixed results from the Chinese docket.
EUR/USD now shifts its attention to 1.0500
The ongoing upward momentum of the Greenback prompted EUR/USD to lose more ground, hitting new lows for 2024 around 1.0600, driven by the significant divergence in monetary policy between the Fed and the ECB.
Gold aiming to re-conquer the $2,400 level
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
Bitcoin price defends $60K as whales hold onto their BTC despite market dip
Bitcoin (BTC) price still has traders and investors at the edge of their seats as it slides further away from its all-time high (ATH) of $73,777. Some call it a shakeout meant to dispel the weak hands, while others see it as a buying opportunity.
Friday's Silver selloff may have actually been great news for silver bulls!
Silver endured a significant selloff last Friday. Was this another step forward in the bull market? This may seem counterintuitive, but GoldMoney founder James Turk thinks it was a positive sign for silver bulls.