The EUR/USD has been experiencing a turbulent ride lately, with various factors impacting its value. However, economists at Nordea expect the pair to continue to grind higher in the coming months, despite the current market conditions.
One of the factors affecting the value of the EUR/USD is the impact of the lower rate differential on the USD. While the USD usually benefits during turbulent times, it has been hurt by this factor, which has led to a decrease in its value.
ECB needs to do more to bring inflation under control
The economists at Nordea believe that the European Central Bank (ECB) needs to do more from here to bring inflation under control. This is a significant factor that is likely to lead to an increase in the value of the EUR/USD in the future.
The need for the ECB to control inflation is due to the current economic conditions. The COVID-19 pandemic has had a significant impact on the global economy, and many countries, including the European Union (EU), have had to take drastic measures to mitigate the impact of the pandemic on their economies.
Uncertainty remains high
Despite the positive outlook for the EUR/USD, uncertainty remains high in the market. If a new global downturn were to occur, the USD could strengthen, which would impact the value of the EUR/USD.
The economists at Nordea are aware of this uncertainty and are closely monitoring the situation. They understand that the market can be unpredictable, and they are constantly analyzing the economic conditions to ensure that their predictions are as accurate as possible.
In conclusion, the EUR/USD is expected to grind higher in the coming months, despite the turbulence in the market. The need for the ECB to control inflation is a significant factor that is likely to contribute to the increase in value of the pair.
However, uncertainty remains high in the market, and a new global downturn could impact the value of the USD, leading to a decrease in the value of the EUR/USD. As such, it is important for investors to remain cautious and keep a close eye on the economic conditions in the coming months.
Overall, the EUR/USD is expected to increase in value, despite the current market conditions. However, the need for caution and the impact of uncertainty cannot be overstated. As always, it is crucial to keep a close eye on the economic conditions to ensure that investments are made wisely.