Nordea FX Strategy Research maintains its bearish EUR/USD outlook into year-end and recommends going short on rallies into 1.17-1.18 range.
"We still think there are general downside risks to European inflation but upside risks to US inflation in coming months. USD weakness should boost US inflation, while past EUR gains should dampen EA inflation – tending to undermine the EURUSD in the process. Indeed, if US core inflation accelerates to 2%, say over the next six months, relative inflation will weigh on the EUR/USD - even if EA core inflation picks up from its surprisingly low level in October," Nordea argues.
", for instance, due to year-end effects and related dollar scarcity. ," Nordea advises.