EUR/USD has rallied over the past month with the cross breaching the 1.08 mark. Economists at Danske Bank analyze the pair’s outlook.
Further upside potential in the near-term
We maintain the strategic case for a lower EUR/USD based on the relative terms of trade, real rates (growth prospects), and relative unit labour costs.
We continue to expect a downward trajectory over the next 6-12M.
In the near-term, we still believe there is further upside potential for the cross, primarily due to weaker-than-expected US economic data and a generally positive risk appetite. However, escalating geopolitical tensions pose a risk to our near-term prediction of a weaker USD.
Forecast: 1.10 (1M), 1.09 (3M), 1.06 (6M), 1.04 (12M)
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