2018-2019 Forecasts For Euro, US / Dollars, Norwegian Krone And Yen (USD/CAD, EUR/USD, EUR/NOK, USD/JPY)

Here's a currency forecast roundup from the Exchange Rate Research Team covering the USD/CAD, EUR/USD, EUR/NOK, USD/JPY crosses from Citibank, Lloyds, Scotiabank, Danske Bank and JP Morgan.

Citi FX: USD/CAD exchange rate heading lower on US Dollar weakness

The USD/CAD exchange rate moved lower on Monday but failed to break out of its tight range on a quiet day of economic data.

The US Dollar was the laggard in the G10 space, as it posted heavy losses against the Euro and Pound.

The Canadian Dollar typically tracks Dollar performance slightly so was also a slight underperformer. Analysts at Citibank believe that USD/CAD may have fallen a bit far for now, but see potential for it to continue to grind lower in the longer term,

“CAD outlook: Circumstances haven’t really changed much. It feels like the recent moves in USD/CAD are overdone. General dollar weakness may lead USD/CAD lower even against a weaker oil price in 2H and trade concerns. 0-3 month forecast: 1.28; 6-12 month forecast: 1.23.”

Euro-to-Dollar: EUR/USD exchange rate forecast to find strong support on dips

The Euro has lost some of its lustre as the economic data has continued to underperform.

EUR/GBP pushed lower on Monday below 0.8650 as the Pound continued to perform strongly.

EUR/USD was able to bounce in the face of some broad based USD weakness but is still capped by 1.24.

FX strategists at Scotiabank continue maintain a bearish view on the Dollar, looking higher in EUR/USD as they match it with a bullish outlook for the Euro,

“EUR/USD remains in consolidation mode but the strength of support on weakness last week reaffirms our broader bullishness on the EUR outlook. We continue to expect firm support on dips to the low 1.23 area (40- day MA at 1.2321) and see strong resistance (bull break out point at 1.2434 – the top of the 2018 consolidation range).

We remain broadly bearish on the USD from a short-term point of view, reflecting weak seasonal trends, and from a broader perspective, reflecting investors shifting exposure to other major currencies as the USD’s longer run cycle is peaking/reversing while wider deficits weigh against USD sentiment.”

Danske Bank: EUR/NOK a range play

The Norwegian Krone continues to chop sideways, even as Oil Prices remain elevated. In EUR/NOK, momentum has slowed and a break in either direction will likely prove decisive. As economic fundamentals have slowed in Sweden, Norwegian data has held up slightly better, possibly as energy prices have gradually helped restore employment and kept inflation somewhat elevated. Economists at Danske Bank believe the Krone will remain stuck in its recent range for some time until new fundamentals emerge,

“We see EUR/NOK as a 9.47-9.75 range play. The spike in oil prices following the weekend attack in Syria is in isolation positive for the NOK, but we emphasise that geopolitically-driven volatility in oil prices tends to have a smaller short-term impact on the NOK than when oil prices are driven by global demand shocks. Also, we think much of the move lower in EUR/NOK last week on higher oil prices was related to markets pricing in a high probability of military response in Syria from the allies.”

J.P Morgan: Japanese Yen could rise as wages pick up this Spring

The JPY was flat on Monday, moving essentially sideways in generally quiet trade. USD/JPY was lower as the Dollar fell across the board after retail sales came in largely as expected, with a mild beat last month. FX strategists at J.P Morgan see plenty of reasons why the Yen could be set to move higher as the fundamentals for the economy continue to suggest that the dovish monetary policy currently employed may be unsustainable as price pressure and wages continue to rise,

“Volatility in the equity market, growing expectations for inflation and concerns over US protectionism have combined to lift the yen modestly. Although these risk factors were all highly anticipated, their simultaneous occurrence has created conditions for the yen’s rise.

Japanese unions are currently in the midst of spring wage negotiations. Higher wages could create modest inflationary pressure in the fall, fueling expectations that the Bank of Japan (BoJ) will raise its target for the 10-year yield in December. Investors have been unusually sensitive to hawkish rumblings from the BoJ, pushing the currency higher well in advance of any concrete policy shift”