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The skies are darkening above the euro-zone economies as almost every data point shows. This doesn’t mean that EUR/USD is falling in a straight line.

Nevertheless, the team at Danske sets lower targets for the months ahead, as well as limits for bounces:

Here is their view, courtesy of eFXnews:

In the short term EUR/USD might continue to range trade as mixed US data and a more dovish tone from the Fed are likely to support the market’s expectations that the Fed will increase rates in H2 15.

However, on a three to six months’ horizon the case for a lower EUR/USD driven by relative monetary policy remains intact and we target the cross at 1.22 in 3M and 1.20 in 6M.

We still expect any bounces in EUR/USD to stop ahead of 1.30/1.31 and would indeed consider to sell on rallies.

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