Economists at Danske Bank still see EUR/USD at 1.08 in a 12-month view as policymakers seem increasingly committed to curtail global inflation by tightening financial conditions. 

Dollar still has the upper hand

“We keep our current forecast on EUR/USD unchanged at 1.08 in 12M as we see policy makers as having become increasingly committed to curtail global inflation by tightening financial conditions; and further, the economic cycle is slowing. Thus, we see the surprise potential for the European economy as small.”

“The key risk to see EUR/USD towards 1.20 is seeing global inflation pressures fade and industrial production increase.”

“The risk to take EUR/USD below 1.08 is a scenario where central banks tightens further amid a cyclical slowdown, akin a scenario like seen in early 80’s.”