Chief Analyst at Danske Bank Christin Tuxen forecasts the pair could test the 1.28 area within a year’s view.
“Short term, as USD offers a better cyclical story and a favourable carry relative to EUR, we still see a case for EUR/USD downside. We would expect good support at the Dec-17 lows around 1.17 though. However, our medium-term story remains unchanged: a turn in the capital tide from USD to EUR is brewing as the relative attractiveness of EU versus US assets is on the rise. Alongside valuation, this is set to support EUR/USD in 6-12M. However, risks are increasingly that a dragged-out ECB ‘exit’ will postpone the next round of EUR strength”.
“We revised lower our short-term forecast profile, meaning we continue to see EUR/USD at 1.18 in 1M, 1.19 in 3M, 1.23 in 6M, and 1.28 in 12M”.