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Jens Peter Sørensen, chief analyst at Danske Bank, explains that the EUR/USD pair has settled around pre-ECB levels and the continued drop that they have been looking for has yet to materialise.

Key Quotes

“The Fed this week will be important in determining whether we can see another dip lower: we expect the Fed to lower its ‘dot’ signal to one rate hike in 2019 (down from two) and would not be surprised if it signals that it will be ‘one and done’; this would likely be seen as dovish and support EUR/USD even if the Fed has begun downplaying the importance of the dots.”

“We still look for two hikes due to our overall positive outlook for this year; this should hold a hand under the USD further out – but not necessarily this week.”

“Friday’s PMIs from either side of the Atlantic could what send EUR/USD lower yet again though: we are looking for a decent US manufacturing reading while the euro-zone one could be set for another drop, highlighting that the cyclical picture still favours the USD. Further, a US-China trade deal now looks delayed until April.”