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Senior Analyst at Danske Bank Piet Christiansen assessed the current developments around the pair.

Key Quotes

“EUR is now awaiting further budget details from Italy and responses from the EU and rating agencies, and there is a clear risk that the Italy discount on EUR could expand near term”.

“Coupled with the carry lure of the USD, we expect EUR/USD to test the lower end of recent ranges and dip below 1.15 over a 1M horizon. Separately, we note that on Friday the IMF’s quarterly COFER release showed another drop in the share of USD in global reserves, as the reserve currency status of USD is being challenged behind the scenes, partly due to Trump’s ‘America first’ agenda”.

“A slow-moving process but nevertheless one that contributes to shifting the safe-haven properties of USD”.