EUR/USD seen moving toward 1.06/1.03 in 6/12 months – Danske

Analysts at Danske Bank continue to forecast a lower EUR/USD over the next months after the rate hike from the European Central Bank (ECB). 

Key quotes: 

The dovish hike from the ECB and ongoing US outperformance are weighing on the cross.

We make no changes to our EUR/USD forecast, and hence we maintain our strategic case for a lower EUR/USD based on relative terms of trade, real rates and relative unit labour costs.”

We expect the relative strength of the US economy to continue weighing on the EUR/USD in the coming months as growth differentials take the driver’s seat, and we continue to forecast the cross at 1.06/1.03 in 6/12M.

As it is hard to imagine a sudden change of the current USD momentum, and with commodity prices currently rising, we may reach our 6M forecast for the cross earlier than expected.