EUR/USD Set To Rally In 2016, Now Is The Time

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EUR/USD is certainly already on the move, thanks to the big dollar dive. To be fair, this assessment from Danske was released before the move. Here is their reasoning:

Here is their view, courtesy of eFXnews:

One argument for a lower EUR/USD:

– Relative rates: still in favour of USD…

Relaitve rates a USD positive

…but several arguments for a higher EUR/USD:

Valuation: EUR/USD is substantially undervalued

EURUSD is substantially undervalued

External balances: The EU/US CA differential is at its widest level since 2004-06

Cyclicals: the Eurozone’s business cycle looks stronger than the US cycle

Positioning: speculators are stretched short EUR/USD > impact of relative rates fading

Positioning speculators streched short EURUSD

Terms of trade: ’lower oil for longer’ has become a EUR positive

Hedging flows: commercials FX hedging of EUR set to fall, which should support EUR/USD

EURUSD forecast 3 6 12 months

Now is the time to prepare for a higher EUR/USD:

We recommend investors have long EUR exposure. We recommended to buy EUR/USD 12M bullish seagull.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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