FXStreet (Edinburgh) - Senior Analyst at Danske Bank Christin Tuxen has suggested the pair could recover the 1.20 handle within a year’s time. Key Quotes “We now look for the Fed to deliver the first rate hike in December and for the ECB to ease substantially before year-end and we lower our 1M and 3M forecast as the cross has further to fall on relative rates”. “We look for a temporary break below the March low at 1.0458 in December, forecasting EUR/USD at 1.04 in 1M (previously 1.10)”. “We do not think the cross is headed for parity and we see little potential for the market to price sustained divergence in Fed-ECB policy beyond December as (i) the market is already pricing a good deal in terms of Fed-ECB divergence, (ii) the impact of relative rates on EUR/USD is waning and (iii) the bearish EUR/USD positioning looks increasingly stretched”. “Thus, we target 1.06 in 3M (was 1.08). Longer term, we still expect to see a gradual move higher in the cross towards the levels warranted by medium- to long-term fundamentals. We keep our 6M and 12M forecast unchanged at 1.12 and 1.20, respectively”. For more information, read our latest forex news.