EUR/USD to peak around 1.25-1.27 during the first half of 2021 – Nordea

FXStreet Team FXStreet

Economists at Nordea see the EUR/USD pair peaking in the first half of the year as the USD yield curve is still alive. The USD curve has more steepening potential, while the potential is very modest in the EUR curve.

Key quotes

“Usually, long bond yields tend to pick-up when nominal GDP growth is strong, but the USD curve should be (clearly) most sensitive to this storyline. EUR/USD could consequently peak during the first half of this year because of a wider USD-EUR interest rates spread.”

“A too strong EUR will turn into a slight headache for European exports, while the US looks ripe for a solid economical comeback meanwhile. We accordingly adjust our forecast to reflect this, and expect a peak in EUR/USD during first half of 2021 around the 1.25-1.27 area before a reversal longer alongside higher spreads between USD and EUR interest rates.”

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