EUR/USD seen at 1.18 in 12-month – Danske Bank

Thomas Harr, Global Head of FICC Research at Danske Bank, sees the pair edging higher towards the 1.1800 area within a year’s time.

Key Quotes

“We adjust downward our 1M and 3M EUR/USD forecasts to 1.11 and 1.10 from 1.12 previously, while we maintain our 6M forecast at 1.14 and 12M forecasts at 1.18”.

“On a 1-3M horizon we think the combination of relative rates, Brexit risks and the fact that the US business cycle looks stronger than the Eurozone’s should drive as lightly lower EUR/USD.”

“We do not believe that a ‘Bremain’ will drive a substantially higher EUR/USD as this will increase the chance that the Fed will hike in September.”

“On a 6-12M horizon we view valuation and external balances as supportive for a substantially higher EUR/USD.”

“In addition, we expect the ECB to become more tolerant of EUR strength as CPI inflation picks up”.