EUR/USD set to edge lower towards the 1.10 level – Nomura

EUR/USD fell sharply to mid-1.1200s late Tuesday. The pair has climbed back above 1.1300 but economists at Nomura believe it is just a matter of time for a move towards 1.10.

A global slowdown typically benefits USD 

"We find more compelling macro and flow reasons for a move towards 1.10 to be on the horizon, it’s just a matter of time." 

"Rate spreads suggest EUR/USD should be much lower (sub 1.10) and FX is still playing catch up.” 

“A global slowdown typically benefits USD. German new orders are in decline and with China slowing too it’s difficult to see why European growth should outperform.” 

“In addition, there is the added uncertainty over rising covid cases, a new variant and restrictions.”