EUR/USD seen at 1.09 in 6-month – Danske Bank

Christin Tuxen, Chief Analyst at Danske Bank, sees the pair advancing to the 1.0900 handle in the medium term.

Key Quotes

“We think EUR/USD will stay within the 1.04- 1.10 on a 3M horizon”.

“Near-term risks are mainly on the downside as (i) the Fed is set to become somewhat less accommodative than the market is pricing at present, and (ii) ECB will have to scrap exit discussions and extend QE (delivering no deposit-rate hike) as a drop in inflation ahead will increase the pressure for more easing”.

“Longer term, we maintain that fundamentals such as valuation and current account balances remain supportive and will drag EUR/USD higher down the road”.

“Thus the cross is set to be range-bound near term and we have pencilled in some limited downside near term, targeting the pair at 1.06 in 1M and 3M (prev. 1.08), 1.09 in 6M (prev. 1.10) but keeping our 12M forecast at 1.14”.