Eurusd To Consolidate Danske Bank

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Eurusd To Consolidate Danske Bank

Eur/Usd To Consolidate Near 1.09 - Danske Bank

According to Danske Bank, the EUR/USD is highly likely to consolidate near 1.08 or 1.09. The key risks faced by the EUR/USD are auto tariffs, trade war, and heightened geopolitical tension.

The recent auto tariffs were meant to strengthen the US economy and help the US Dollar. However, the US Dollar didn't react too well to the news and actually moved lower.

Auto Tariffs Hurt Us Dollar

Even today, there is great deal of uncertainty over the tariffs. For starters, we don't know if the auto tariffs will stay or will be reversed, like we have seen in the past.

One thing is certain - The tariffs will have an impact on the receiving country and even the USA! Tariffs will directly lead to higher prices in the US, which means more inflation.

Over the long run, it could hinder the interest rate cuts. However, it will also weaken the US economy, which will also make the US Dollar weaker.

Trump wants to increase local manufacturing, but he doesn't realize that it is something which requires time (years) and a lot of patience.

Also, the products manufactured in the USA will be more expensive than the ones made in China or another country.

Looking ahead, any aggressive tariffs will lead to risk-off sentiment in the markets. Even then, there is no guarantee of an upside in the US Dollar as the recession risks are back in focus.

Based on all of this, it is hard to make a long-term forecast for the EUR/USD. That's why Danske Bank has hinted at consolidation in the EUR/USD for the next few months.

However, the long-term trend will be EUR/USD negative as the Eurozone will be more effected by tariffs as compared to the USD.

All of this risk has also led many investors to start looking at foreign markets instead of the US stock market, bonds, or the US Dollar.

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