EUR/USD seen around 1.16 in 12-month – Danske Bank

Chief Analyst at Danske Bank Christin Tuxen expects the pair to edge higher towards the 1.16 area within a year’s view.

Key Quotes

“The level shift after the first round of the French election took EUR/USD into higher ranges and was testament to political risks having been key in deferring the cross from moving higher”.

“Near term, while the ECB will likely grow a tad more hawkish in June in light of the recent upside surprises to both activity and inflation, the Fed is simultaneously set to announce a QT scheme which is ‘unchartered territory’ for US markets”.

“This could support the USD somewhat near term but we stress that the significant move to watch out for on a 12M horizon will likely be fuelled by an ECB shift away from further easing”.

“Longer term, we thus maintain that fundamentals such as valuation and current-account balances remain supportive. We now target the pair at 1.07 in 1M, 1.09 in 3M (prev. 1.06), 1.11 in 6M (prev. 1.09) and 1.16 In 12M (prev. 1.14)”.