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Jens Pedersen, Senior Analyst at Danske Bank, noted the greenback could revert the current weakness.

Key Quotes

EUR/USD rose yesterday and broke out of the ranges seen over the past 3M; a key level to watch now is 1.1791 (9 July high)”.

“Price action in recent days is an illustration that higher US yields are not necessarily a USD positive if driven by long-end yields. Notably the 2Y10Y US slope has steepened in recent days and thus while the US 10Y yield has broken 3% again, Fed pricing has been little changed, making room for US inflation to surprise on the upside down the road; this is USD negative in isolation”.

“However, mind our call that the Fed remains on autopilot and hence that USD strength may not be over just yet”.