EUR: Likely to trade on a weaker footing through 2020 after hitting 1.09 by year-end - Nordea
11.11.2019, 08:02

EUR: Likely to trade on a weaker footing through 2020 after hitting 1.09 by year-end - Nordea

Nordea Research discusses the EUR outlook in light of its latest forecasts which now expects EUR/USD at 1.09 by year-end and at 1.13 by mid-2020.

"US liquidity momentum will improve in 2020, but in comparison to the episode in 2017 when it coincided with a decent rise in EUR/USD we are less optimistic for the EUR this time around. In 2017, the EUR and EUR FI were both significantly repriced as the market priced in fewer political risks following Macron’s win of the French presidential election, improved Euro-area growth prospects (#Euroboom was making waves in social media at the time) as well as an eventual QE exit by the ECB. This time around we don’t rule out more political risks being priced in later in 2020, our growth forecast remains fairly downbeat and our ECB forecast is for more QE, not less. As such we expect the EUR to trade on a weak footing well into 2020. In general, our new FX forecast reflects that currencies with a positive beta to world trade or to global risk appetite may continue to struggle for a while. However, things will start to look more upbeat in 2020," Nordea adds.

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