We lower our overall profile on EUR/USD forecasting 0.95 in 12M on the back of a combination of economic slowdown, a substantial negative terms-of-trade shock to Europe vs US, a fundamentally overvalued EUR. We pencil in a further rise in EUR/NOK over the coming 3-6M on rising global recession risks but forecast a secular weakening trend amid the outlook for elevated inflation and commodity prices in the years ahead. We expect mounting global recession risks and a deteriorating domestic housing market to weigh on the SEK over the coming 6-12 months forecasting EUR/SEK at 11.00. We continue to forecast EUR/GBP at 0.84 in 12M.
We expect the SNB to hike by 50bp again in September and December to curtail underlying inflation pressures bringing the policy rate to 0.75%. With the SNB broadly following the ECB, we see relative rates as an inferior driver for the cross. We continue to forecast the cross to move lower on the back of fundamentals and tighter a global investment environment. We thus lower our overall forecast profile and now forecast EUR/CHF at 0.96 in 12M. - Danske Bank Research
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