Danske Research discusses EUR/USD outlook, expecting it to stay within recent ranges, targeting 1.11 on a 3M horizon, and recommend selling on spikes towards 1.13
"The relative growth outlook, risks in the pricing of the Fed versus the ECB from current levels, and betas to wealth effects of broadly rising markets are all supporting the USD over the EUR as we enter Q1. However, we also stress another factor keeping a lid on EUR/USD, namely relative sector compositions – and without a European auto recovery the cross is grounded," Danske notes.
"Any further upside risk for EUR/USD is more likely to derive from prolonged US weakness than European strength. On a 3M horizon, we see 1.11 as the key attractor level and recommend selling on jumps towards 1.13," Danske adds.