Euro/dollar enjoyed a rally based on the Fed’s dovish hike as well as the favorable outcome of the elections in Holland. What’s next?
Here is their view, courtesy of eFXnews:
Danske Bank Research now expects that EUR/USD is close to forming a base after some of the bearish factors start to fade.
On the USD side, Danske notes that the argument for a short-term move lower in EUR/USD driven by more clarity with regard to a possible US border tax adjustment and Homeland Investment ActII is fading as appears that clarity with regards to US tax reforms has been postponed to later in the year a
On the EUR side, Danske believes it is most likely that Le Pen will not become France’s next president and as such France’s election will not hinder a gradual uptick in EUR/USD.
“Medium-term, we continue to expect EUR/USD to move higher on the large eurozone-US current account differential and the undervaluation of the EUR,” Danske projects.
All in all, Danske revised its EUR/USD forecasts higher predicting the cross at 1.06 in 1M(1.04 previously),1.08 (1.05), 1.10 (1.08) and 1.14 (1.12).
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