Danske Research discusses EUR/USD outlook and sees a scope for a drift lower towards 1.05 in the near-term.
"European financial assets are effectively having a fire sale, with Italian spreads in particular widening (at least until authorities seemingly stepped in this morning). EUR/USD has now firmly broken below 1.10, EUR/NOK is making new all-time highs, EUR/GBP above 0.92, and CEE FX is in complete disarray. USD strength is again top of mind in FX markets," Danske notes.
"Bottom line: we see EUR/USD as likely headed lower still, and especially so while European assets are apparently in a fire sale and the market continues to be stressed.
Near term, a further drift towards 1.05 is in sight as risk aversion remains uncapped by central banks and policy actions," Danske adds.