EUR/USD looks oversold over the medium to long term – Lloyds Bank

By FXStreet FXStreet (Córdoba) – According to the report for the year ahead, analysts from Lloyds Bank, expect 2016 to be another volatile year for EUR/USD, with the pair testing the lows around 1.05 in the first months of the next year.

Key Quotes:

“We look for EUR/USD to retest the lows below 1.05 in the early months of 2016. Indeed, a break below parity cannot be ruled out if the Fed tightens monetary policy more aggressively than the market (and we) currently anticipate.”

“While the risks for the euro remain to the downside for now, over the medium to longer term, we believe the euro looks oversold. Fundamental estimates of fair value for EUR/USD center around 1.20 to 1.30. But it is likely to take clear signs of a recovery in ‘core’ euro area inflation, firmer signs of economic recovery and an associated narrowing in US and euro area rate spreads to push the euro meaningfully higher.”

“We target 1.04 by end Q1 2016 and 1.10 by the end of next year.”

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Source:: FX Street