EUR/USD: systemic possibility fears look jam to dominate mark motion – Danske

The EUR/USD pair remained steady following the resolution of the European Central Financial institution to raise charges by 50 basis aspects on Thursday. Analysts at Danske Financial institution leer the pair at lower than fresh levels on a three to 6 months horizon. 

Diminutive market reaction to the ECB

“Despite the large uncertainty with respect to the slip resolution, the reaction in FX markets used to be remarkably cramped. We entered the meeting with a fundamental predisposition of searching to promote EUR/USD rallies on a 50bp hike however the obnoxious rarely ever reacted with the FRA curve knocking down upon announcement.”

“Having a look forward, systemic possibility fears look jam to dominate mark motion among majors. Our bias remains for systemic fears to subside over the upcoming weeks, but we humbly acknowledge the excessive sensitivity to negative info, which leaves us aspect-lined and not utilizing a excessive-conviction calls shut to period of time. On a 3-6M horizon, we aloof pencil in a lower EUR/USD when put next with fresh dwelling levels.”

“We query the ECB deposit rate to peak at 4%, with a 50bp rate hike in Would possibly possibly per chance additionally simply adopted by a 25bp hike in every June and July.”


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