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Danske Bank: outlook for EUR/USD

According to Danske Bank strategists, the US dollar is likely to weaken in the coming month following the decision by the Fed to postpone tapering of its QE programme. They now see EUR/USD at $1.3300 (previously $1.3100) in 3-month time but could see the pair as high as $1.3700 in 1 month if early October data prove disappointing.

“Beyond a 3-month horizon, the Fed is likely to have laid out a tapering plan, which should induce a shift back in focus to the fact that the Fed will still be a first-mover on reining in easing among major central banks. This should pave the way for a move in relative rates weighing on EUR and we have kept a downward profile on EUR/USD on the medium-term horizon but now see the pair at $1.3000 in 6 months ($1.2800), heading lower towards $1.27 in 12 months ($1.2500).”

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