EUR/USD: Near Term Downside Risks Before Rallying To 1.15 By Year-End

EUR/USD received some support from the ECB but the pair failed to rally hard. What’s next?

Here is their view, courtesy of eFXnews:

EUR/USD has been in demand as of late mainly following its positive reaction to last week’ President Draghi’s press conference.

In that regard, Nomura Research notes that President Draghi communicated that the Bank had removed the reference to using all instruments to signal that the sense of urgency is gone, and as the ECB’s risk assessment has likely become more balanced, these communications supported EUR for now.

Nonetheless, over the next few months, Nomura argues that French elections and the Fed policy stance will likely be more important drivers of EUR/USD, as they pose near-term downside risks.

Beyond that, Nomura expects the EUR to benefit from the reflation in the medium term and target 1.15 for EUR/USD by year-end.

EUR/USD is trading at 1.0652 as of writing.