Analysts at Danske Bank lowered their forecast profile for EUR/USD and they expect the pair at 0.93 in 12 months on the back of a substantial negative terms-of-trade shock to Europe compared to the US, tightening of global financial conditions, broadening USD strength and downside risk to Eurozone growth.
Key Quotes:
“The key risk to shift EUR/USD towards 1.15 is seeing global inflation pressures fade and industrial production increase. However, ‘transitory’ has substantially lost credibility and European industrial production continues to be weak. This will continue as manufacturing PMIs heads below 50. The upside risk also include a renewed focus on easing Chinese credit policy and a global capex uptick but neither appear to be materialising, at present.”