EUR/USD to reach 1.28 in a year’s view – Danske Bank

Christin Tuxen, Chief Analyst at Danske Bank, believes the pair could edge higher to the 1.28 neighbourhood in 12-month.

Key Quotes

“Near term, with neither the ECB nor the Fed in a hurry to signal a faster tightening pace, a key issue remains whether the US will escalate the trade-war rhetoric further. In our base case, that barriers are limited to a very specific area, EUR/USD is set to stay range bound near term. 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. However, the ECB is very alert to the feedback loop with markets, which will make them go slow. Still, we think flows together with valuation will support EUR/USD in 6-12M”.

“We have kept our forecast profile unchanged and thus continue to see EUR/USD at 1.23 in 3M, 1.25 in 6M, and 1.28 in 12M; we see it at 1.23 in 1M with the pair set to stay in the 1.21-1.26 range”.