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EUR/USD: Looking for a lower euro in H2 – Danske Bank

According to analysts from Danske Bank proceed to forecast EUR/USD at 1.22 in one to three months and appear for a decline to 1.16 in a twelve-month horizon.

Key Quotes:
“We view truthful price for EUR/USD to be a 1.08-1.20 range, relying on the mannequin employed. Either way, at cutting-edge levels, valuation is impartial if no longer an outright headwind for spot. US assets’ style overall performance continues to be robust relative to European counterparts and the COVID-19 pandemic has fast-forwarded the adoption of technology, favouring flows into the US. EUR/USD consequently faces structural decline due to a lack of competitiveness. A valuation reversal (lower EUR/USD) may want to come from rising US actual rates, fading EU optimism, or Chinese slowdown.”

“Upside dangers which can take EUR/USD above 1.24 consist of the EU proving to be an engine of world boom and/or the Fed strongly backtracking on the current optimism for H2, fuelling similarly large USD decline. Details on greater fiscal easing will be counted as we cross in to Q1 vis-àvis its have an effect on on pricing of US coverage costs and relative financial recovery.”

“A robust US financial system and the excessive possibility of extra US easing, have eased EUR/USD upside dangers incredibly – though no longer entirely. We ought to certainly assume to see decrease Chinese PMIs and as a result fading tailwinds for international manufacturing. We maintain our 1M and 3M EUR/USD at 1.22 as these occasions are as expected. Furthermore, we nevertheless seem to be for a decrease EUR/USD in H2 with a 12M forecast of 1.16.”

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