EUR/USD above 1.23 as Fed delivers ‘dovish hike’ – Danske Bank

Chief Analyst, Jakob Ekholdt Christensen at Danske Bank, explain that the EUR/USD went back above 1.23 as the Fed delivered its ‘dovish hike’ yesterday and even if the dots spell potential for a repricing towards higher rates still, they continue to stress that short-term rates do not appear to be a key driver of EUR/USD at present.

Key Quotes

“EUR/USD risks more two-sided over shorter horizons, EUR/USD has been largely unmoved by notably the recent uptick in Libor rates as the short-rate spread fails to set a course for the pair. This suggests that the Fed needs to change its course on policy more dramatically for it to impact USD crosses. Today, focus will be on the trade measures against China that the Trump administration announced it will lay out shortly – and, in turn, on a likely retaliation from the Chinese.”