Nordea Research discusses EUR/USD outlook and sees a scope for further weakness into the US Nov elections. Nordea would look to buy this EUR/USD after he elections.
"We see several similarities to the 2017 development in EUR/USD. In August/September 2017, Benoit Couere of the ECB talked down the EUR strength via several comments on prolonging the QE program every time EUR/USD hit 1.20. In 2020, Phillip “you shall not pass” Lane has taken over that role and was quick to respond when EUR/USD hit 1.20. If we look at the technical similarities from 2017 to 2020, it looks as if EUR/USD will bottom right around the election date. Not an unlikely scenario, in our view. After the election, assuming an uncontested result, the US Treasury will be able to flush markets with USD liquidity, a fiscal deal could be found and the Fed could decide to ease policy in the new AIT-regime," Nordea notes.
"The bottom-line – we see a scope for a stronger USD over the coming 4-5 weeks but we hold a strong conviction in buying risk assets (higher EUR/USD, stronger EM, stronger NOK vs. SEK) after the election," Nordea adds.