EUR/USD sideways before moving higher in longer term - Danske

According to analysts from Danske Bank, EUR/USD will continue to move sideways in a three month period with some downside pressure, and then will move higher drive by valuation and current account flows.

Key Quotes:

“EUR/USD has traded in a broad range over the past year between 1.05-1.15 and is now in the upper part of the range around 1.125. We look for EUR/USD to move broadly sideways on a 3M horizon with some downward pressure short term.”

“The cross will face dampening factors from risks surrounding the Brexit vote and relative rates between the US and the euro area are gaining more importance as speculative positions are much more balanced, having been strongly long the USD. With only one hike priced in from the Fed this year, we see scope for some upward pressure on short-end yields in the US, which would work in favour of the USD. However, longer term, we still look for a higher EUR/USD driven by valuation and current account flows being in favour of the EUR.”