The euro is on track to close with significant gains against the dollar in 2020. Credit Suisse economists see more limited upside potential in 2021, mostly due to extreme positioning. Expect the 1.2518 / 98 area to offer significant resistance.
Key statements:
“We maintain our long-term bias for EUR / USD higher after completing its base above the March high of 1.1495, with the ‘measured base target’ remaining at 1.2355, with 1.2518 / 98 still our primary target: the 2018 high, the 38.2% retracement of the entire bear market of 2008/2017 and the 61.8% retracement of the 2014/2017 dip. With a strong long position still in place, we expect this to remain a barrier formidable, suggesting that the EUR may not be the best expression of the weakness of the USD during 2021”.
If our view of the base case for the USD is correct, this would suggest that the 1.2518 / 98 level may also eventually be broken later in the year, with resistance seen below at 1.2755, ahead of 1.3191 and eventually 1.3863 / 1.3993. in the very long run. “
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