Long Term Forecast For Eurusd

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Long Term Forecast For Eurusd

Long Term Forecast For The Eur/Usd Pair

According to Berenberg, the long-term target for the EUR/USD pair is just near the 1.50 handle. It's worth mentioning that the EUR/USD short-term range of the pair is 1.1500 - 1.200.

Berenberg also highlighted how the USA continues to register a budget deficit every single year. This has been going on since the 1960s consistently, which is quite worrying for the US economy.

Us Budget Deficit Widens Again

Over the last few years, the US economy has registered solid growth. However, the deficit just continues to widen, which highlights the structural problems faced by the US economy.

Now that the USA has passed the budget bill, the US deficit will cross 7% during the next fiscal year. And if the US economy enters a recession, things will get more serious.

direct result of this widening budget deficit is that it also increases the debt interest payments. Over the long run, it will create a loop where the US government will need to keep borrowing more to keep things afloat.

This fiscal deterioration will be bad news for the US Dollar. That's why Berenberg believes that the US Dollar will weaken in the medium and long term.

Even today, Berenberg believes that the US Dollar is overvalued by almost 20%. Based on all of this, Berenberg has set a forecast of 1.50 for the EUR/USD pair.

They also added that the descent of the US Dollar will continue even after reaching its fair value. In fact, the US Dollar will become an undervalued currency in the FX market.

The bottom line is that tough times are ahead for the US Dollar. On the other hand, other currencies such as the EUR or the JPY will gain the upper hand against the US Dollar in the coming months.

Another important factor which will benefit the Euro is the upcoming rate cuts from the US Federal Reserve.

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