In view of analysts at Danske Bank, the pair remains poised to prolong its rangebound theme between 1.15 and 1.21.
Key Quotes
“We have long held the view that ECB policy ‘normalisation’ should continue to support EUR via the potential for this to lure capital flows back to the eurozone as more securities are lifted back into positive-yielding territory”.
“While the flow case remains intact and may in fact gradually have started to play out, it looks set to take longer to materialise on a wider scale due to a foot-dragging ECB”.
“Meanwhile, a sustained upward pressure on US rates means USD will stay backed for ‘carry’ reasons – and Trump’s ‘America first’ rhetoric is further adding to the sense of USD assuming a new role. In combination with a sticky Italy discount and the changing nature of the trade war, we do not see EUR/USD heading back to the mid 1.20s near term”.
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