EUR/USD: Bullish in the short-term but USD is still the long-term winner – Danske Bank

Analysts at Danske Bank see the EUR/USD pair around 1.20 in three months but longer-term they consider the USD as still ‘the winner’ and forecast 1.16 in twelve months. 

Key Quotes: 

“Upside risks to take us above 1.20 include the EU proving to be an engine of world growth and/or the Fed credibly committing to inflation overshooting (which it has not as of today). The combination of positive progress across US fiscal policy, Brexit, the coronavirus situation and global growth may culminate by year end. If so, we could see a new test of 1.20.”

“We see scope for a move to 1.20 near term, if the stars align as discussed above. We have lowered our 6M-12M projections 1-3 figures on valuation headwinds and fading support from the Chinese credit cycle. Note that December holds an unusual number of events that we expect to define risks and direction for EUR/USD as we go in to 2021. Until we see a firm change in the macro narrative, EUR/USD is a 1.15-1.19 range.”