A note via analysts at Nordea, comments on the direction ahead for euro, in summary:
- The US is now about to reap the growth rewards of the experimental policy mix of massive money printing and wide scaled fiscal stimulus.
- The US is likely to outperform all peers growth-wise this year, which over time usually leads to a stronger USD
- USD bonds may continue to yield better than most peers
- the Fed is more likely to respond to strong growth rates via a slightly tighter policy, maybe via a tapering discussion already this summer
Our view on USD interest rates could also lead to a reversal of the EUR/USD towards the second half of this year
- likely that we will end 2021 on clearly lower levels in EUR/USD compared to current spot
- the ECB seemingly wants to keep printing more into the economic rebound during the spring and early summer
- We target 1.15-1.16 in EURUSD
Bolding mine above, just to highlight their view on the Federal Reserve tapering.
