Analysts at Danske Bank continue to forecast a lower EUR/USD over the next months after the rate hike from the European Central Bank (ECB).
Key quotes:
The dovish hike from the ECB and ongoing US outperformance are weighing on the cross.
We make no changes to our EUR/USD forecast, and hence we maintain our strategic case for a lower EUR/USD based on relative terms of trade, real rates and relative unit labour costs.”
We expect the relative strength of the US economy to continue weighing on the EUR/USD in the coming months as growth differentials take the driver’s seat, and we continue to forecast the cross at 1.06/1.03 in 6/12M.
As it is hard to imagine a sudden change of the current USD momentum, and with commodity prices currently rising, we may reach our 6M forecast for the cross earlier than expected.
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