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EUR/USD potential decline to 1.2500 – Danske Bank

FXStreet (Edinburgh) - Flemming Nielsen, Senior Analyst at Danske Bank, now sees the pair heading towards 1.25 in the medium term.

Key Quotes

EUR/USD broke lower on Wednesday, taking out recent lows”.

“A falling EUR/USD is the biggest consensus macro view this year. However, we believe that it is still the right view”.

“During H2 12 to H1 14, the eurozone experienced huge inflows into equities and fixed income markets where we suspect a large part of these flows were currency unhedged”.

“The ECB’s TLTRO could ‘crowd out’ foreign buying of periphery bonds, in our view. In addition, foreigners are now paid to hedge the FX risk”.

“We have been recommending short EUR/USD since 28 May. We move our target lower to 1.25 from 1.27”.

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