EUR/USD heading lower short term – Danske Bank

Analysts from Danske Bank, expect the EUR/USD pair to head lower in the short-term and they point out that a break below 1.0950-1.1000 will open the doors to more losses. 

Key Quotes: 

“EUR/USD is grinding lower and a break of 1.0950-1.10000 will open the door for further losses. Short term, we expect EUR/USD to head lower. Political risks are rising in Europe with the prospect of a hard Brexit highlighting the disagreements within the eurozone. In addition, it appears that positioning is much lighter in EUR/USD now. The fact that the move lower in EUR/USD is gradual suggests that we are not at the end of a trend and it has further to go. Relative rates also speak in favour of a lower EUR/USD in the short term.”

“Technically, a break below 1.0950-1.1000 will open the door for further losses. In the medium term, we continue to look for a move higher in EUR/USD though, as current account flows are strongly in favour of the EUR and our valuation models point to an undervalued EUR. On a 12M horizon, tapering talk in the euro area is likely to also support the EUR in an environment with only very gradual Fed rate hikes.”

 

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