ANZ Research discusses EUR/USD outlook and targets the pair at 1.25 by mid-2021 and at 1.28 by end-2021.
"We revised up our EUR/USD forecasts. COVID-19 vaccines will support a quicker return to pre-crisis GDP levels, despite the downside risks to growth over the winter. Our base-case expectation is that positive cyclicality from Q2 will favour the euro. Global GDP growth and trade volumes are recovering; and fiscal and monetary stimulus, supported improving health expectations, could drive above-trend growth into 2022,"ANZ notes.
"A Biden presidency is expected to embrace a multilateral approach to trade, favouring dialogue over tariffs. The likelihood of a protracted USEU trade dispute has fallen. If Janet Yellen is confirmed as US Treasury Secretary, fiscal and monetary policy are likely to work together in driving higher growth and inflation to optimise economic outcomes. DXY and US inflation expectations are inversely correlated. We now expect EUR/USD to rise towards 1.28 by end 2021," ANZ adds.