EUR/USD likely to drop further, targeting 0.95 in 12 months — Danske Bank

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According to Danske Bank analysts, the US dollar will continue to rise against the euro in the coming months. They expect the pair EUR/USD to be at 0.96 in a period of three months and at 0.95 in a year.

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“The large negative terms-of-trade impact in Europe versus the US, further cyclical weakening among trading partners, coordinated tightening of global financial conditions, extension of dollar strength, and downside risk of the eurozone makes us keep our focus on moving EUR/USD even lower (targeting 0.95), a view not shared by consensus.”

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“The key risk for EUR/USD moving towards 1.15 is to see global inflation pressures fade and industrial production pick up. However, ‘transitional’ has substantially lost credibility and European industrial production remains weak.” This situation will continue as manufacturing PMIs fall below 50. Upside risks also include renewed attention to Chinese credit easing and a rebound in global capex, but neither seems to materialize, for now.”

Source: Fx Street

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