Danske Research discusses EUR/USD outlook and maintains a core bearish bias towards 1.15.
"With dollar strengthening versus most crosses, EUR/USD was little different yesterday. A few weeks ago, the dollar turnaround was mostly visible by the lack of a firm downtrend in USD/CNH and slightly weak Asian stock markets. Now, however, it's stronger dollar versus Scandies, commodity currencies and high beta EM-alike. Some of this is also related to weakening equities, notably among tech related sectors. As always, the volatility induced downtick in EUR/USD will probably be removed within a few days (50pips, say)," Danske notes.
"We continue to view the current weakness in spot as driven primarily by a combination of Asian weakness, a global though marginal tightening of liquidity conditions and near-term economic uncertainty. If this continues, we may very well see further declines in EUR/USD, where we target 1.15 and thus see further downside risk," Danske adds.