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EUR/USD is trading around 1.1850, in the middle of the range. Does it have room to the upside? The team at Nordea sees room for rises.

Here is their view, courtesy of eFXnews:

Nordea FX Strategy Research discusses EUR/USD outlook into year-end, and outlines  3 key reasons why the pair is still  resilient and hasn’t been traded significantly lower yet.

1-  Reason number one why EUR/USD trades at elevated levels still is the continued over-performance from European key figures compared to already lofty expectations…

2- Secondly, the USD is also dented by a turn-around in the trend of the number of excess reserves in USDs…

3-  Thirdly, the re-pricing of the relative inflation outlook in the US versus EA is still yet to be seen…

The bottom-line is that we still think it is too early to expect EUR/USD to break through 1.20. Re-call the ECBs (maybe co-incidental) verbal intervention back in August and September every time EUR/USD tested 1.20,”  Nordea concludes.

Any level close to 1.20 should hence be used to sell into. And we don’t rule out a pronounced move lower in EUR/USD during December. In particular, if US politics don’t take center stage (at least in a bad way),” Nordea advises.

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