Eurusd Will Slump Lower

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Eurusd Will Slump Lower

Eur/Usd Will Slump To 1.14

Saxo Bank has released its new forecast for EUR/USD, where they see the pair falling to 1.14. Overall, the Saxo Bank's forecast is bearish as the pair is still seen near the 1.17 handle.

It appears the market has already priced in a rate cut from the US Federal Reserve. So, maybe that's why the US Dollar is now showing strength instead of losing its value.

Euro Is Overvalued

Saxo Bank added that the reason for their bearish forecast is that the Euro is overvalued. So, it has less to do with the US Dollar's strength and more to do with the fact that the Euro has gotten ahead of itself.

On the US side, the escalation between the US government and the Federal Reserve continues to rise. It appears the only way it would end is if both parties agree on a mutual monetary policy.

As for the concerns about the US economy, Saxo Bank added that other economies are also facing fiscal fears. They also highlighted that the bond market of France is expected to come under selling pressure.

Given all of the fundamentals, Saxo Bank is now citing 1.14 as the most probable level for the EUR/USD pair. Below that, the next key support for the EUR/USD will be near 1.10.

The analysts from Saxo Bank also added that the recent struggle between the US government and the Fed shouldn't be taken lightly. The ultimate conclusion of this struggle will be the end of the Fed's independence.

And the end of the Fed's independence means the US Dollar will take the damage. Also, the Saxo Bank commented on how the US, UK, and Japan are facing issues related to fiscal sustainability and internal debt. So, all of these can put stress on the independence of the central banks.

The overall situation is positive for the US Dollar and bearish for the Euro, according to Saxo Bank. But, it's also worth noting that most other investment banks are actually bullish on the Euro.

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