Danske Bank: EUR/USD can reach 1.20

Economic growth in the US is lower in the second quarter of 2016, but in recent months the labor market in the country pleasantly surprised market participants. Private consumption should remain strong in the coming months, although the weakness in retail sales in July, say analysts. European data was stronger than expected, they added. Brexit likely have a negative impact on the economy of the Eurozone later, they say, adding that we will see some weakness in European economic data in the coming months.
According to them, FED's boss Janet Yellen should clarify the outlook for US monetary policy in her speech on August 26. They believe, that the Fed will wait until the first half of 2017 before raising interest rates. At the same time the ECB is unlikely to cut interest rates. However, analysts expect the bank's quantitative easing program to be extended beyond March 2017.
According to forecasts of the bank, the exchange rate of EUR/USD should be in the area around 1,20. Thus prices are currently too low.
Political risks from the US elections could have a negative impact in the coming months as their impact can be negative for both dollar and euro, experts say.
Bank analysts maintain the view, that EUR/USD will reach 1.20 level.