EUR/USD: move higher likely to fade ahead of Jackson Hole - Danske Bank

The EUR/USD pair is likely to test 1.20 in the next week or two, according to analysts from Danske Bank. They warn that the move is likely to fade ahead of the Jackson Hole symposium. 

Key Quotes: 

“The combination of lower unemployment and better wage data sent EUR/USD slightly lower on the announcement, as it supports the Fed’s case for announcing ‘quantitative tightening’ (shrinking the balance sheet) in September and raising rates again in December.”

“EUR/USD fell slightly on the NFP announcement. However, the very modest price action shows the market’s eagerness to buy EUR/USD. In our view, we could see a push towards 1.20 over the coming one to two weeks, as momentum is very strong.”

“However, the move is likely to fade ahead of the Jackson Hole symposium on 24-26 August and the ECB meeting on 8 September, with the pressure building on the ECB to raise concerns about the strength of the EUR. The effective EUR is now back to September 2014 levels.”

“Fundamentally, we expect EUR/USD to rise further over the coming 12 months on relative growth and valuations. We forecast EUR/USD at 1.22 in 12M.”