FXStreet (Edinburgh) - In the view of Analyst Anders Fischer at Danske Bank, the EUR should trend lower to the area of 1.28 in a 12-month horizon.

Key Quotes

“Bottom line for FX markets is that the ECB more or less gave the market everything it had dreamed of”.

“The ECB action supports our view that over the next 12 months we could see a very divergent monetary policy between the eurozone on the one side and the US and the UK on the other. All in all supporting our view that there is more EUR weakness in store against other majors except JPY”.

“Why is the euro not suffering then? We believe that positioning plays a role and not least it is important that these measures are also very supportive for European financial assets like equities (DAX above 10,000 yesterday) and strong performance for peripheral bonds”.

“Hence, the ECB is actually attracting further portfolio investments into the Eurozone”.

“But eventually these flows will dry out and as tightening moves closer in the US and the UK the move lower in EUR/USD and EUR/GBP should start again. All in all, we are quite comfortable with our 12M 1.28 EUR/USD forecast and our 12M 0.77 forecast for EUR/GBP”.

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Forex pairs in this Article » EUR/USD, EUR/GBP

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