Conveying some forecasts for the euro vs. US dollar, these via Danske Bank
- 1 month: 1.14
- 3: 1.15
- 6: 1.17
- 12 months: 1.17
Citing:
- Fed clearly saying it will lower rates
- do not expect global data to turn around for the better
- little risk of an end to the trade war anytime soon
- Fed should stay dovish
However
- a trade deal would also be USD negative
A trade deal and a 'decent Brexit' would be positive for the Eurozone and could pave the way for positive surprises later in the year, as a lot of negativity is priced in on the euro political side. The ECB is trying to talk down EUR/USD but we expect these efforts to have only secondary effect.
External balances, as measured by relative current-account balances, hint at EUR/USD upside medium term but as history suggests, a deficit is sustainable for prolonged periods, notably for a world reserve currency such as the USD.
