FX Forecast Update

Danske Bank signals the end of US dollar debasement, revising its EUR/USD forecast down to 1.12 over 12 months. The shift is driven by resilient US growth, AI investment, and a hawkish repricing of Federal Reserve expectations amid persistent energy price shocks.

Key Takeaways

• 1.USD debasement has ended as macro momentum shifts in favor of the US, driven by AI-related investment and resilient labor demand.
• 2.The forecast for EUR/USD is revised lower, with a 12-month target of 1.12, reflecting a more hawkish Fed stance compared to the ECB.
• 3.Scandie currencies (SEK and NOK) face significant headwinds from stagflation, higher global real rates, and geopolitical uncertainty in the Middle East.

Table of Contents

• FX market overview
• EUR/USD - USD debasement has come to an end
• EUR/SEK - mounting upside risks amid protracted US-Iran conflict
• EUR/NOK - stagflation and higher global real rates to support cross
• EUR/DKK - new historic high
• EUR/GBP - to move higher
• USD/JPY - to move modestly lower
• EUR/CHF EUR/PLN
• AUD/USD USD/CAD
• USD/CNY - decline to continue despite broader USD strength
• Oil - market growing sceptical of a reopening
• Danske Bank FX forecasts vs EUR
• Danske Bank FX forecasts vs DKK
• Danske Bank FX forecasts vs SEK
• Danske Bank FX forecasts vs NOK
• Danske Bank FX forecasts vs USD
• Danske Bank FX forecasts vs GBP
• Disclosure and disclaimer

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