The U.S. dollar marked time on Monday as the prospect of an early rollout of coronavirus vaccines was offset by concerns about economic restrictions to control the spread of the virus, leaving safe-haven assets in limbo.
A holiday in Japan also made for sparse liquidity and made investors reluctant to test major chart barriers on a number of dollar pairs.
The euro was hovering at $1.1858, having repeatedly failed to break above the $1.1993 resistance level last week. It needs to clear the November top of $1.1919 to extend its uptrend.
Analysts at Capital Economics are bullish on the single currency’s longer-term outlook.
“We think that the exchange rate will rise further over the next few years against a backdrop of lower euro-zone stability risks; an increased real yield gap between the euro-zone and the U.S.; and a continued recovery in the global economy,” they wrote in a note.
They lifted their forecasts for the euro and now see it at $1.2500 by the end of 2021 and $1.3000 at the close of 2022, up from $1.2000 and $1.2500 previously.