EUR/USD: Valuation Is Neutral If Nor An Outright Headwind Around Current Levels; Where To Target? – Danske


What is the outlook for EUR/USD?

Here is their view, courtesy of eFXdata:

Danske Research discusses EUR/USD from the valuation perspective.

“We view fair value for EUR/USD to be a 1.08-1.20 range, depending on the model employed. Either way, at current levels, valuation is neutral if not an outright headwind for spot. US assets’ trend performance continues to be strong relative to European counterparts and the COVID-19 pandemic has fast-forwarded the adoption of technology, favouring flows into the US,” Danske notes.

“EUR/USD thus faces structural decline due to a lack of competitiveness. A valuation reversal (lower EUR/USD) could come from rising US real rates, fading EU optimism, or a Chinese slowdown…We still look for a lower EUR/USD in H2 with a 12M forecast of 1.16,” Danske adds.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.