The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
What do the analysts expect?
2019-11-11 • Updated
Here we have gathered the most interesting currency forecasts of analysts from the key commercial banks.
Follow USD/ZAR for a short-term decisions.
Morgan Stanley advised investors to buy USD/ZAR this week. There were rumors that the South African Reserve bank (SARB) would follow the other emerging economies like Russia and Turkey and make a rate hike. However, analysts predicted that the hawkish behavior of SARB would not result in upside exposure. Wednesday’s inflation report for August will add some thoughts to investors and traders on the possible outcome of the interest rate meeting on Thursday.
Here are several forecasts which focus on the EUR/USD medium-term projections.
Analyst from Goldman Sachs made a forecast for the pair’s future. It was suggested that the euro would experience a slump before turning to the bullish trend. He mentioned, that the correction on the market has been going since its August lows. The support level to keep an eye on right now is 1.1515. After reaching this level, there is a possibility for EUR/USD to skid to the resistance between 1.1928 and 1.1946.This intention will be even higher after crossing the August highest level at 1.1733. This will complete the correction process. The price will move down after it will reach the resistance zone near 1.19. Alternatively, the price will stay sideways between 1.15-1.17 for some time.
Danske Bank also sees EUR/USD going down to the support at 1.15 in a 3-month period. This fall is explained by the greenback strength due to an escalation of the trade conflict between the US and China. However possibility for the next ECB rate hike in the medium term can stabilize the euro. It is expected for EUR/USD to reach 1.18 in half a year and blow off to 1.25 in a year.
Unicredit analyst agrees to follow bullish reactions for EUR/USD in the medium term. He notes, that the current situation with tariffs did not affect the euro heavily, as it is still trading in the zone between 1.15 and 1.17. However, the short-term forecasts should be cautious as the US economy is outperforming others.
Barclays shares the same opinion about the USD strength, although points out that the outperformance of the US economy can last longer. Nevertheless, EUR/USD correction could happen due to positive news and data.
Several banks expressed their opinions on GBP/AUD and EUR/GBP in the middle term.
Westpac and Morgan Stanley share the same opinion concerning the aussie’s future. GBP/AUD is predicted to be bullish. This is connected with an optimistic influence of Brexit negotiations on the British pound and a sensitive reaction of the Australian dollar to the US-China trade wars.
Morgan Stanley advices the clients to buy the pair at 1.80 and target at 1.90. The bank is sure about its predictions as the UK economy continue to grow, following the latest GDP and changes in wages.
Due to the same reasons SEB advices to sell EUR/GBP. The news about Germany and Austria trying to avoid the “no deal” Brexit supported the GBP. However, analysts advice traders to be patient. It is expected that by the end of this year EUR/GBP would fall at 0.93-0.95 at the first time and then possibly reach 0.86. According to the latest report of SEB, before that moment the British currency could experience losses. A withdrawal agreement with the EU will secure the GBP and give time to plan the partnership.
Are you looking for a long-term trade idea?
Capital economics suggest to keep an eye on the AUD/USD pair. According to their data, they expect the rate to fall to 0.65 by the end of 2019. It is connected with the slower growth of the GDP, little wages growth, fall in the iron ore prices and the rise of consumer inflation.
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