- EUR/USD: Upside potential near-term – Danske Bank
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EUR/USD: Upside potential near-term – Danske Bank
Analysts at Danske Bank maintain their strategic case for a lower EUR/USD pair based on relative terms of trade, real rates and relative unit labour costs. However, they warn that in the near-term, they see some potential for topside risk on the back of peak policy rates, an improving manufacturing sector backdrop relative to the service sector, and/or easing China pessimism.
Near-term risk of higher EUR/USD
We maintain the strategic case for a lower EUR/USD based on relative terms of trade, real rates (growth prospects) and relative unit labour costs. Hence, we maintain our 12M forecast at 1.03.
In the near-term, we see some potential for topside risk to the cross. Peak policy rates, an improving manufacturing sector relative to the service sector, and/or easing China pessimism could add some support to EUR/USD in the near-term.
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