Mikael Milhoj, Senior Analyst at Danske Bank, gives his opinion on yesterday’s bull run in spot on Draghi’s comments.
Key Quotes
“Yesterday saw a volatile EUR session with EUR/USD spiking on the back of Draghi’s hawkish comment of a ‘relatively vigorous’ forthcoming pickup in core inflation”.
“The EUR/USD rally, however, faded ahead of the important 1.1851 resistance level and at the end of the session, the cross had erased most of its gains”.
“The move highlights an important point: namely that a change in ECB monetary policy marks an important leg in our call for an eventually higher EUR/USD”.
“For now, there is still a long time to our call for the first rate hike falling in December 2019, but we should follow ECB communication closely as there has been a slight shift in rhetoric towards a more hawkish bias recently”.
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