EUR/USD took advantage of the greenback’s weakness to make gains and reach out for the highs. What’s next?
Here is their view, courtesy of eFXnews:
In reaction to ECB’s recent flirt with stimulus exit talk, Danske Bank FX Strategy argued that as the ECB has let the genie out of the bottle for EUR/USD, it’s unlikely to expect any substantial dip in the cross near term (see here).
Danske still holds this view but notes that speculators are now net long EUR/USD which suggests risks are on the downside for the cross near term.
“That said, we emphasize that any dips in the EUR/USD are likely to prove shallow and short-lived. Thus, we continue to see the cross in a range of plus/minus a few big figures around 1.13 on a 1-3M horizon,” Danske argues.
“In our view, EUR/USD has the potential to rise towards the 1.20s as Fed-ECB divergence fades but the next move from current levels to, say,1.20 will be more ‘demanding’ than the one from below 1.04 to 1.14 seen in H1,” Danske adds.
For lots more FX trades from major banks, sign up to eFXplus
By signing up to eFXplus via the link above, you are directly supporting Forex Crunch.Get the 5 most predictable currency pairs