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Mario Draghi defied the discontent and delivered a dovish message. EUR/USD is trading at the 1.2360 handle. What’s next for the single currency?

The team at Danske  lays the potential path:

Here is their view, courtesy of eFXnews:

The ECB press conference today was clearly dovish in both Mario Draghi’s tone and the actual change in statement. The ECB now officially targets a balance sheet the same size as in early 2012 (Draghi said March 2012 during the Q&A), which is effectively a target of EUR3trn. This is an increase of EUR950bn from today’s level.

So, Draghi did it again. He speaks out of the manuscript initially – this time mentioning the size of the balance sheet in 2012 as a soft target without backing from the Council – only to get it into the manuscript subsequently.

The ECB was clearly dovish at today’s press conference. EUR/USD fell 1 figure on the press conference and we believe it has further to fall. In our view, it also reflects that the market is very keen to buy the USD and sell the EUR and is using any opportunity to express this view. We forecast EUR/USD will reach 1.20 in six months time.

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