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Jan 17 - 12:55 PM

EUR/USD: EUR Optimism Is Strong, But Eventually Set To Fade - Danske

By eFXdata  —  Jan 17 - 10:45 AM

Danske Research discusses EUR/USD outlook and maintains a strategic bearish bias over the coming months.

"Our topside risk scenario to EUR/USD has played out. Not only have European natural gas prices come substantially lower but re-opening hopes for China have contributed to lifting cyclical assets vs defensives. Nearterm we acknowledge the risk of this continuing and hence we lift the shortend of our profile close to current spot," Danske notes. 

"Meanwhile, further ahead we believe too much positivity is priced into the EUR and that markets underestimate the re-tightening potential of financial conditions. In our view, EUR/USD remains overvalued on a 1-3Y horizon and unless we see global growth persistently accelerate risks are eventually skewed towards a setback," Danske adds.

Source:
Danske Research/Market Commentary

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