EURUSD to end this year at 1.13 - Scotiabank

The outlook for the euro (EUR) is improving and analysts at Scotiabank have adjusted their forecast up slightly and now expect EURUSD to end this year at 1.13.

Key Quotes

“Previously, we expected EURUSD to reach 1.02 through midyear but the January low just above 1.03 very likely marks the low ebb of the cycle. The EUR has steadily improved through the first half of the year as populist politics failed to make significant inroads in key national elections in the Eurozone, easing investor concerns about the outlook for the Eurozone project. Strong gains in European stock markets since the first round of the French presidential election have helped support the EUR. Investors appear to view the Eurozone economy as providing better returns and fewer risks than the US.”

“We think the European Central Bank (ECB) remains some distance from raising interest rates as inflationary pressures remain subdued. But it is clear that the end game of the ECB easing cycle is getting closer, particularly as the core Eurozone economies are reflecting relatively strong growth momentum. Nominal Eurozone rates are still negative but the downtrend in yields has stabilized and EurozoneUS spreads have stopped widening in the USD’s favour. We now expect EURUSD to end this year at 1.13 and to reach 1.20 at the end of next year.”