Nordea Markets: EUR/USD to be lower for longer

Nordea Markets analysis team suggest that in order to underpin EUR/USD pair, we need a “premature” end to QT, such as in April and if the Fed allows QT to run all the way until Q4, then EUR/USD is kind of capped around 1.16-1.18 from a liquidity perspective.

Key Quotes                                               

“Should Fed allow the excess liquidity in USDs to dwindle below $1000bn (towards $500bn in the passive scenario), it could keep EUR/USD lower for longer (in 1.10/15 range). In any case, it is a tough sell to be a long-term EUR bull currently.”