20 Mar 2015
EUR/USD remains on the cards – Danske Bank
FXStreet (Edinburgh) - Morten Helt, Senior Analyst at Danske Bank, remains of the view that the pair could visit lower levels in a 6-month view.
Key Quotes
“Yesterday, we changed our expectation for the first Fed hike from June to September”.
“Importantly, this does not change our view that EUR/USD downside will continue to play out in the coming six months”.
“As we have stressed previously, USD strength has historically arrived primarily at the end of Fed easing cycles and ahead of a first hike. We think history will repeat itself this year with a re-pricing of the Fed playing out in the FX market during the spring/summer”.
“As such, it is the outlook for Fed policy normalisation finally arriving that matters for the USD, not whether a first hike comes before or after the summer”.
“Also adding to EUR/USD downside in the near term is the strength of the ‘hot potato’ effect on the single currency fuelled by ECB policy, derived from euro-zone excess liquidity and a negative deposit rate. Notably, the search for yield will in our view continue to induce EUR selling in the months ahead”.
Key Quotes
“Yesterday, we changed our expectation for the first Fed hike from June to September”.
“Importantly, this does not change our view that EUR/USD downside will continue to play out in the coming six months”.
“As we have stressed previously, USD strength has historically arrived primarily at the end of Fed easing cycles and ahead of a first hike. We think history will repeat itself this year with a re-pricing of the Fed playing out in the FX market during the spring/summer”.
“As such, it is the outlook for Fed policy normalisation finally arriving that matters for the USD, not whether a first hike comes before or after the summer”.
“Also adding to EUR/USD downside in the near term is the strength of the ‘hot potato’ effect on the single currency fuelled by ECB policy, derived from euro-zone excess liquidity and a negative deposit rate. Notably, the search for yield will in our view continue to induce EUR selling in the months ahead”.