The continued push towards tighter global liquidity conditions (Chinese deleveraging, the ECB’s PEPP moderation and the Fed’s downsizing) is positive for the dollar. Therefore, Danske Bank economists continue to see downside risks to EUR/USD over the next year, targeting 1.15 in 12 months.
EUR / USD poised to move lower
“For the dollar, the key remains that tapering is being seen as a ‘done deal’ in the sense that it will come in the fourth quarter. In the midst of this, global growth appears to be slowing down. Surveys also indicate that investor interest in Europe has been declining and sentiment is shifting towards the dollar. “
“The continued push towards tighter global liquidity conditions (Chinese deleveraging, ECB’s PEPP moderation and Fed reduction), slower growth amid inflation uncertainty, where the Fed appears reactive, will likely add strength as well. to the dollar. “
“We consider the Fed’s push towards reducing stimulus in light of these trends and continue to see downside risk for EUR / USD over the next year, targeting 1.15 in 12 months and towards 1.13 in 15 months“.