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Oct 13 - 06:55 PM

EUR/USD: ‘Stagflation’ Is A Perfect Storm For EUR At Current Levels - Danske

By eFXdata  —  Oct 13 - 03:00 PM

Danske Research discusses EUR/USD outlook in light of revising lower its forecast profile.

"We lower our EUR/USD forecast, from 1.13 to 1.10 in 12M and similarly over time. This reflects our view that market themes are increasingly pro dollar. The manufacturing cycle is clearly slowing but central banks need to tighten to catch-up with inflation pressures and this is quite negative for EUR/USD, especially at current levels around 1.15-16’s," Danske notes. 

"The key risk to see EUR/USD above 1.20 is seeing global inflation pressures fading. However, ‘transitory’ has increasingly lost credibility and we are likely to see a further EUR-negative environment as manufacturing growth slows down. The risk to take EUR/USD below 1.10 is a scenario where central banks tightens further amid a cyclical slowdown, akin a scenario like seen in early 80’s," Danske adds. 

Source:
Danske Research/Market Commentary

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