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Christin Tuxen, chief analyst at Danske Bank, suggests that they are now expecting the EUR/USD pair to drift somewhat below the 1.12 mark in the near-term.

Key Quotes

“With the risk of pockets of USD strength from renewed pricing of Fed hikes and a trade deal that will not provide much imminent support, this opens the possibility for a EUR/USD move towards 1.10 out to a 3M horizon.”

“In the medium term (beyond 3M), we expect EUR/USD to stabilise and move back into the 1.12-1.16 range and stress that any drift higher will be limited, with upside mainly deriving from positive spillover to the euro area from a turn in the global (China) cycle.”

“Our new forecast profile for EUR/USD thus reads 1.11 in 1M, 1.13 in 3M (previously 1.15), 1.15 in 6M (previously 1.20) and 1.17 in 12M (previously 1.25).”