EUR/USD seen around 1.09 in 1-month – Danske Bank

Thomas Harr, Global Head of FICC Research, expects the pair to grind lower towards the 1.09 area in a month’s view.

Key Quotes

“We lower our EUR/USD forecasts to 1.09 in 1M (from 1.12 previously), 1.08 in 3M (1.12), 1.11 in 6M (1.14) and 1.15 in 12M (1.18). Over the next one to three months, politics, relative growth expectations and interest rates will weigh on EUR/USD. In particular, we expect recent signals that the UK will opt for a hard Brexit to weigh on EUR/USD near term”

“Longer term, we maintain our long-held view that the undervaluation of the EUR and the wide eurozone-US current account differential are EUR positives. In addition, we expect the Fed to raise interest rates very gradually. However, more sluggish medium-term growth prospects for the eurozone will imply that it will take longer time to reach the MEVA estimate of 1.27 in EUR/USD”.