In EUR/USD, economists at Danske Bank view flows, terms of trade (ToT) and levels as adding to downside risks.

Terms of trade

“In recent quarters, terms of trade have strongly improved for the US. We suspect this may be an effect from commodity exports and broad technology alike, whereas the euro area more so sees the negative effect from rising import prices.”

Flows

“For flows, the loss of global momentum in the manufacturing sector does appear to have become a drag on European equities, whereas US performance continues.” 

Levels

“We suspect the downside risk is amplified by EUR/USD (still) being elevated and the level is itself a headwind to spot.”