EUR/USD set to reach parity in the coming months – Danske Bank

Economists at Danske Bank lower their current forecast on EUR/USD to 1.00 in 12M.

EUR/USD to parity

“The large negative terms-of-trade shock to Europe vs the US, a further cyclical weakening among trading partners, the coordinated tightening of global financial conditions, broadening USD strength (currently, vs Asia) and downside risk to the euro area makes us revise our EUR/USD forecast lower.”

“We now shift the forecast from 1.05 on 12M to 1.00.” 

“The key risk to shift EUR/USD towards 1.15 is seeing global inflation pressures fade and industrial production increase. However, ‘transitory’ has substantially lost credibility and European industrial production continues to be weak. This will continue in coming months. The upside risk also includes a renewed focus on easing Chinese credit policy and a global CAPEX uptick but neither appear to be materialising, at present.”