Analyst at Danske Bank Aila Mihr sees the pair edging higher in the medium to long terms.
“The EUR rally lost momentum yesterday and EUR/USD fell back to 1.11 level. There was no news or data releases triggering the move, but stretched short-term technicals most likely prompted profit taking following the past days’ strong rally”.
“We think the eurozone is unlikely to be immune to a likely turn in the global cycle, which our cyclical lead models point to, and the recent uptick in the effective euro should ensure that the ECB stays in easing mode”.
“We remain bullish EUR/USD and EUR/JPY on a medium- to long-term horizon as fundamentals such as valuation and current-account balances remain supportive. We would look to re-enter a bullish position in both pairs if a setback in EUR crosses materialises in coming months”.