EUR/USD to take another leap lower – Danske Bank

The combination of a stronger US economic outlook and higher US yields should provide a tailwind for the USD over the coming months, suggests Research Team at Danske Bank.

Key Quotes

“As a result, we expect the EUR/USD to take another leap lower to 1.05 in 1M and 1.04 in 3M, as political uncertainty in Europe may also weigh on EUR. However, we maintain our view that the FX cross will head higher mid next year, as the EUR is fundamentally undervalued. The global reflation environment is also typically supportive for the SEK and NOK and we recommend to position for stronger NOK and SEK versus EUR, although near term the two scandi currencies may experience some weakness. We also expect the Japanese yen to see further weakness, notably against the EUR.”