Flash: We see EUR trading towards its lows near 1.20 over 12 months – RBS

FXstreet.com (Barcelona) - The EUR/USD finished the day up 64 pips at 1.2884, and while some analysts see the pair trading in a relatively stable in the short term, it’s the longer them that has them more concerned.

According to Greg Gibbs, Foreign Exchange Strategist at RBS, “ the easy global monetary policy and search for yield has supported periphery assets. There has been some progress in improving bank balance sheets, there is improved bank liquidity and the squeeze on SME finances may have peaked. There may be tentative signs of bottoming in periphery countries. As such, EUR downside also looks limited in the near term, it is likely to out-perform JPY and prove relatively stable."

He went on to add, “A prolonged period of sub-trend growth is likely, and over the medium term we see political risks rising. Consistent with our view that the US economic recovery will gain traction, we see EUR towards its lows near 1.20 over 12 months.”