EUR vigilant on Fed, Italy this week – Danske Bank

Senior Analyst at Danske Bank Piet Christiansen noted the European currency should be under scrutiny ahead in the week.

Key Quotes

“In the majors, much focus has turned to EUR/USD as the cross last week broke out higher of its recent trading range. This week brings both the FOMC meeting and the publishing of the Italian budget proposal”.

“In isolation, we expect the former to act as a USD positive (comfortable Fed) while we expect the Italian budget deficit to fall well within the 3% of GDP threshold, which should confirm the recent diminishing of the political risk premium embedded in the EUR”.

“Overall, therefore, the data calendar provides an ambiguous near-term outlook and we think the cross is likely to end the week close to current levels”.

“We note that the June high of 1.1851 is a key resistance level; a break of this would open up for a test of 1.20”.