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EUR/USD seen below 1.20 for longer – Danske Bank

Chief Analyst at Danske Bank Christin Tuxen gives her views on the prospects for the pair in the next months.

Key Quotes

“Near term, we expect new 2018 lows as notably the US favourable cyclical position continues to manifest itself”¦ Risks to our forecast profile are now clearly on the downside, and especially we emphasise that our 12M forecast (1.28) is challenged as we now envisage an extended period during which EUR/USD will be stuck below 1.20 as support from ECB ‘normalisation’ has been postponed”.

“In our view, clients with USD income/assets should consider risk reversals for hedging purposes out to the 6M horizon as the risk of a significant EUR rebound here has been postponed. Beyond the 6M horizon we think forwards remain attractive, and clients with USD income/assets should exploit the spot dips, which we think will occur near term, to lock in exposure at longer horizons”.

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