EUR/USD seen around 1.17 in 1-3 month – Danske Bank

Senior Analyst at Danske Bank Mikael Milhoj believes the pair could grind lower towards the 1.1700 area in the short term. On the longer run, he expects spot to test 1.2200.

Key Quotes

“EUR/USD fell around one figure on the stronger than expected non-farm payroll (NFP) figure”.

“We have been looking for a near-term push in EUR/USD towards 1.20. However, the price action on Friday following the NFP suggests that the recent strong rally in EUR/USD may be ending”.

“In any case, the EUR rally is likely to ease ahead of the Jackson Hole symposium on 24- 26 August and the ECB meeting on 8 September where the pressure is building on the ECB to raise concerns about the strength of the EUR”.

“The effective EUR is now back to September 2014 levels before the ECB’s QE announcement in January 2015. Fundamentally, we expect EUR/USD to rise further over the coming 12 months on relative growth and valuations. We forecast EUR/USD at 1.17 in 1M and 3M before rising to 1.22 in 12M”.