EUR/USD: Not ready to forecast beyond 1.14 – NFB

National Bank of Canada analysts forecast the EUR/USD pair will end the fourth quarter trading around 1.12 and then will reach 1.14 by the first quarter of next year, before starting to move lower to end the year around 1.0900. 

Key Quotes:

“The return of risk-on sentiment, which hammered the trade-weighted U.S. dollar in October, may take the greenback even lower over the near to medium term. That, of course, assumes the truce holds in the ongoing U.S.-China trade war. But with the Fed signaling pause/end of its easing cycle, monetary policy divergence could rekindle interest in the world’s reserve currency later next year.”

“While we raised our 2020 euro targets slightly in light of the apparent breakthrough in the U.S-China trade negotiations, we’re not ready to upgrade EURUSD forecasts beyond 1.14 considering still-significant risks ahead. It’s possible America will follow up its recent tariffs on $7.5 bn worth of goods imports from the European Union with even more aggressive measures, this time aimed at European autos. Complications relating to Brexit (which has again been delayed) could also stifle the zone’s economic growth.”