Nordea Research discusses EUR/USD outlook and now targets the pair at 1.7 by year-end and at 1.23 by mid of 2021.
"The USD level could be a focal point for the Federal Reserve during 2021 as the USD remains super strong compared to historical averages. A weak USD could be one way of helping inflation higher in the US, why the continued asset purchases from the Fed could work to weaken the USD over time. If we get a synchronized global recovery in 2021 as we anticipate, it usually also leads to a weaker USD against most peers," Nordea notes.
"The ECB has been decently firm in its defence of 1.20 in EUR/USD, why we don’t anticipate that the ECB will allow EUR/USD above such levels until the recovery is more profound than now. The ECB decision to widen the PEPP in December should also work against the EUR in the short-run, why we keep a target of 1.15-1.17 in EUR/USD over the next 1-2 months before a substantial move higher during 2021," Nordea adds.