Monex Europe | Our 2020 year-end view on EURUSD has been revised upwards on the back of diminishing US political risks and our expectations of a firm USD downtrend.
In the short-term, the euro is yet to show the signs of the recent surge in coronavirus cases as vaccine optimism and sustained monetary policy support continues to offset the downside risk in the currency outlook.
EURUSD´s resistance to break the 1.20 level in the short-term is underpinned by a weaker growth differential and broad uncertainty about vaccine developments, i.e. which ones will gain approval and how they will effectively be distributed across the euroarea.
In 2021, once these risks clear, we expect the euro to benefit from a front-loaded rally as treatments prove effective in allowing the economy to re-open and economic outlooks to rapidly improve.