Analysts at CIBC, expect the EUR/USD pair to remain steady for now. The see the pair trading around 1.17 into year-end and also during the first quarter of next year and then rising to 1.20.
Key Quotes:
“The combination of an earlier re-opening and a less dovish central bank compared to the Fed, led to an aggressive expansion in EUR longs over the summer. Speculative positioning reached all-time extremes into the end of August, with the position extension coinciding with the change in Fed policy to average inflation targeting.”
“An unwinding of such positions, triggered by global risk aversion that favours the greenback, alongside eurozone data that added up to an easing the eurozone surprise index, has put a temporary stall into the euro’s march stronger. We expect EURUSD to remain near 1.17 into year-end.”
“Looking ahead into 2021, the arrival of vaccines, and the fading of the current second wave, should encourage renewed euro momentum. The ECB has noted that it’s attentive to the impact of FX gains on inflation and inflation expectations, but we don’t expect any serious push back in term of policy levers that would stand in the way of reach 1.20 on EURUSD next year as long as a recovery is underway.”
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