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EUR/USD has been pressured but always manages to recover. What’s next? Trade wars will have the impact.

Here is their view, courtesy of eFXdata:

Danske Research discusses the USD outlook and  flags further strength on the back of ongoing trade tensions.

“When the trade issue surfaced at the start of the year, the US rhetoric was largely associated with a political push for a weaker USD but lately regular economic channels have started to take over. This has changed the impact of trade tensions on, notably, the USD.

Near-term, the scorecard highlights the case for USD support if the trade dispute escalates.

The Scandi currencies and the EUR are particularly vulnerable.  While EUR/USD could slide towards 1.15 on this, we do not see much further downside in the cross  than that from the ECB already being dovishly priced and the Fed increasingly alert to the negative impact of a trade war,” Danske argues.

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