EUR/USD likely to retest the lows below 1.05 in early months of 2016

EUR/USD is going to be volatile in 2016. While the Greek crisis is abated for now, new tensions might be escalated across many of the highly- indebted euro area countries, which would be main risk.

The possibility for more QE and ECB attempts to reflate, and a constant rise in US interest rates, the line of resistance to weaken ahead for the EUR.

"We look for EUR/USD to retest the lows below 1.05 in the early months of 2016. We target 1.04 by end Q1 2016 and 1.10 by the end of next year", estimates Lloyds Bank. 

While the risks remain to downside for time being, the euro looks oversold over the medium-long term. It is likely to take clear signs of recovery in core area inflation, stronger signs of economic recovery and an associated weakening in US and euro area rate spreads to send EUR higher.

EUR is currently trading at 1.0939 against USD.