Chief Analyst at Danske Bank Christin Tuxen noted there is still room for further decline in the pair.
Key Quotes
“USD momentum stalled towards the end of last week following the US inflation miss. While positioning has seemingly been cleaned up somewhat in the latest move lower in EUR/USD, we still see a case for a better US cyclical position and the rising carry on short positions to pave the way for renewed downside near term; good support seen at the Dec-17 low of 1.1718″.
“But, while US yields are on the rise with the 10Y again flirting with 3% and supportin g USD, we note that the continued US curve flattening is a looming USD negative in making US Treasuries less appealing from a ‘roll’ point of view”.
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