EUR/USD: Downside risks near-term, to move higher longer term – Danske

By FXStreet Analysts from Danske Bank, recommend to be positioned for a lower EUR/USD in the short-term but project that it will trade at 1.18 in 12 months.

Key Quotes:

“EUR/USD reached a temporary peak on 3 May above 1.16 but has since moved lower.
We believe the risks are to the downside near term.”

“Firstly, positioning is now much cleaner than earlier in the year. Secondly, we believe that the market is too negative about the US economy. Thirdly, we believe that Brexit risks will weigh on EUR/USD up to the referendum on 23 June.”

“We see a lower EUR/USD as an asymmetric Brexit view as a ‘remain’ vote would open the door for a Fed September hike.”

“Longer term, EUR/USD will head higher on valuations (our 12M forecast is 1.18) but near term we recommend to be positioned for a lower EUR/USD.”
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Source:: FX Street