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EUR/USD is trading higher following the speeches of Mario Draghi and Janet Yellen in Jackson Hole. What’s next? Here is the bottom line from Nordea:

Here is their view, courtesy of eFXnews:

Nordea FX Strategy Research notes that  even with no news speeches from Fed Yellen and ECB Draghi at Jackson Hole, EUR/USD actually did care, with a late Friday double jump to levels above 1.19.

In this regard, Nordea notes that the question  now is when Draghi and the ECB figure out that saying nothing or very little is not enough to cap the EUR.

“Recall this sensitivity chart of the 2019 inflation forecast to EUR/USD and brent oil. Even though we are past the cut-off date for the September forecasts, it is still worth reminding oneself that FX effects now account for almost 0.6 p.p lower projected inflation since the latest forecast.

If EUR/USD breaks 1.20 we expect the ECB to (finally) intervene rhetorically,” Nordea argues.

“…Bottom-line is that we still tend to favour a short EUR/USD position in Q4, but currently nothing is holding the cross back from testing 1.20 in the short-run.” Nordea concludes.

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