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Christin Tuxen, chief analyst at Danske Bank, explains that the EUR/USD temporarily dropped below 1.12 yesterday further triggering a small rebound in implied volatility.

Key Quotes

“The move was not related to any particular headline or data release and coincided with a rally in US stocks on stronger earnings. At the same time, US rates dropped as the market priced a higher probability of Fed cuts over the coming years.”

“From a technical point of view, it means the market will keep an eye on whether we could see a test near-term of the 1.1177 low from 7 March. There is not much on the calendar to drive EUR/USD before next week.”