EUR/USD: further upside on the cards – Danske Bank

Senior Analyst at Danske Bank Kristoffer Lomholt expects the pair to test the 1.1800 region in the medium term horizon.

Key Quotes

“In FX markets, key focus remains on EUR/USD’s move higher amid the cross yesterday testing the 2015 multi-year high of 1.1714. Recent price action has clearly highlighted market participants’ predisposition towards buying the single currency, underpinning the underlying fundamental pressures for a stronger EUR”.

“In our view, Mario Draghi and the ECB have let the ‘EUR/USD genie’ out of the bottle and paved the way for a continued correction in the FX market of some of the long-standing undervaluation in EUR/USD”.

“In addition, the balance of political risks has shifted in favour of the euro, with skies clearing in the eurozone while politics in the US have been a USD negative recently”.

“As a result, we think more EUR/USD upside is in store, especially on a medium-to-long horizon, as technicals, short-term valuation and positioning are increasingly becoming headwinds in the near term. We forecast EUR/USD at 1.17 in 1M, 1.17 in 3M, 1.18 in 6M and 1.22 in 12M”.