EUR/USD Set To Rally In 2016, Now Is The Time To Prepare – Danske

Feb 3, 2016 at 3:37 PM EST

EUR/USD is certainly already on the move, thanks to the big dollar dive. To be fair, this assessment from Danske was released before the move.

EUR/USD is certainly already on the move, thanks to the big dollar dive. To be fair, this assessment from Danske was released before the move. Here is their reasoning:

Here is their view, courtesy of eFXnews:

One argument for a lower EUR/USD:

– Relative rates: still in favour of USD…

Relaitve rates a USD positive

…but several arguments for a higher EUR/USD:

Valuation: EUR/USD is substantially undervalued

EURUSD is substantially undervalued

External balances: The EU/US CA differential is at its widest level since 2004-06

Cyclicals: the Eurozone’s business cycle looks stronger than the US cycle

Positioning: speculators are stretched short EUR/USD > impact of relative rates fading

Positioning speculators streched short EURUSD

Terms of trade: ’lower oil for longer’ has become a EUR positive

Hedging flows: commercials FX hedging of EUR set to fall, which should support EUR/USD

EURUSD forecast 3 6 12 months

Now is the time to prepare for a higher EUR/USD: We recommend investors have long EUR exposure. We recommended to buy EUR/USD 12M bullish seagull.

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