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EUR/USD broader trend remains negative – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Christin Tuxen, sees the pair resuming its downside in the upcoming months.
Key Quotes
“We expect a lower EUR/USD on a 6M horizon, as the effects of ECB QE and the warm-up before Fed policy normalisation continue to weigh”.
“However, the EUR weakness now playing out, lower oil prices and improved credit conditions should pave the way for EUR strength further out”.
“Coupled with our view that a repricing of the Fed will happen mainly ahead of a first hike over the summer, the potential for upside to US rates is limited beyond 6M in our view”.
“Indeed, the start of a Fed hiking cycle should not in itself steer USD stronger”.
“At the same time, a significant pick-up in euro-zone inflation would make EUR markets aware that the ECB will have to exit QE at some point”.
“We see the cross below parity in 6M before moving higher back towards 1.08 in 12M. We have thus left our EUR/USD forecasts unchanged”.