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Economists at Danske Bank expect the EUR/USD pair to move downward throughout the rest of the year.
We still expect EUR/USD to trend lower over the course of the year.
Despite the recent positive risk appetite, driven by the global rally in equity markets, which strengthened EUR/USD for most of February, we ultimately view the equity rally as a net positive for the USD, as the catalyst for the rally is centred in the US market, attracting flows to the USD.
Overall, we believe the US economy is in a stronger position relative to the Euro Area based on factors such as relative terms of trade, real rates, and relative unit labour costs.
We forecast EUR/USD to reach 1.0500/1.0400 within a 6/12M horizon.
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