Analysts at Danske Bank estimate that the EUR/USD will fluctuate around current levels for the rest of the year, before breaking higher during 2012. They forecast the EUR/USD at 1.38 in 3 months, at 1.44 in 6 and at 1.48 in 12, lower form the previous forecast at 1.50.
The projections are based considering that latest data from the US reduced global recession risk, causing long dollar positions to be unwound. “This has been the dominating driver of the rebound in EUR/USD, but political progress toward a recapitalisation of European banks is likely to also play a role,” wrote Danske analysts. “We doubt that investors will rotate into significant long euro positions in the near term – as European recession risks remain high pointing to the probability of ECB rate cuts.”