EUR/USD is drifting lower, trading in a limited range. What’s next?
Here is their view, courtesy of eFXdata:
Danske Research discusses EUR/USD outlook and maintains a neutral bias with a downside tilt over the next 3 months. Beyond that, Danske is constructive on EUR/USD on a longer-time frame.
“On a 3M horizon, we see EUR/USD trapped in a range around 1.13 but with risks tilted to the downside as ECB will be forced to keep a soft stance at a time where Fed looks more side-lined. Relative cyclical hints will be key near term – but a trade deal could be a kneejerk USD positive,” Danske notes.
Beyond the 6M horizon, a drift higher will materialise as the skies clear a bit for the Eurozone, but we still merely target 1.17 in 12M. For now, ECB has effectively put a lid on the cross and with still heavy carry, we continue to advocate risk reversals when hedging USD income/assets,” Danske adds.
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