10 Mar 2015
EUR/USD below 1.05 in 6-month, Fed's hike in June? – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Pernille Nielsen sees the likeliness the pair could undershoot the 1.05 6-month target and the Federal Reserve hiking in June.
Key Quotes
“The USD rally gained further tailwind yesterday and EUR/USD dropped below 1.08 overnight supported by some hawkish comments from Dallas Fed president Richard Fischer (non-voter, Hawk) saying that the Fed should increase interest rates this month”.
“While the increasingly stretched spot signals are no barrier for further USD strength, it suggests that momentum is likely to ease in the near term leading to a period of consolidation”.
“On the other hand, last week’s strong labour market report has increased expectations that the Fed will remove ‘patience’ from its statement in connection with the FOCM meeting next week on 18 March. Hence, we could still see some USD buying as the market positions for a more hawkish FOMC”.
“Fundamentally, we still expect the Fed to increase interest rates in June and look for further USD strength in the coming months. We target EUR/USD at 1.05 in 6M but we stress that risk are tilted to the downside relative to our forecast, meaning that EUR/USD temporarily could undershoot our 6M target”.
Key Quotes
“The USD rally gained further tailwind yesterday and EUR/USD dropped below 1.08 overnight supported by some hawkish comments from Dallas Fed president Richard Fischer (non-voter, Hawk) saying that the Fed should increase interest rates this month”.
“While the increasingly stretched spot signals are no barrier for further USD strength, it suggests that momentum is likely to ease in the near term leading to a period of consolidation”.
“On the other hand, last week’s strong labour market report has increased expectations that the Fed will remove ‘patience’ from its statement in connection with the FOCM meeting next week on 18 March. Hence, we could still see some USD buying as the market positions for a more hawkish FOMC”.
“Fundamentally, we still expect the Fed to increase interest rates in June and look for further USD strength in the coming months. We target EUR/USD at 1.05 in 6M but we stress that risk are tilted to the downside relative to our forecast, meaning that EUR/USD temporarily could undershoot our 6M target”.