3 May 2016
Further gains in EUR/USD could be limited – Danske Bank
In opinion of Arne Rasmussen, Chief Analyst at Danske Bank, the pair’s upside could struggle to find fresh legs.
Key Quotes
“EUR/USD broke through the top end of the 1.05-1.15 range, which has been holding since August 2015 where a clean break of the 1.15-1.16 area would open the door for further gains”.
“ECB’s nominal effective euro is around 1ppt below the peak reached during the market turmoil in mid-February suggesting that the EUR/USD could strengthen a bit further near term”.
“Fundamentally, EUR/USD is supported by valuations and current account differentials but we think that relative rates will cap EUR/USD strength”.
“Note that the euro zone April core CPI was revised lower to 0.7% y/y, which should worry the ECB and it may lower its inflation forecasts at the next meeting in June”.
Key Quotes
“EUR/USD broke through the top end of the 1.05-1.15 range, which has been holding since August 2015 where a clean break of the 1.15-1.16 area would open the door for further gains”.
“ECB’s nominal effective euro is around 1ppt below the peak reached during the market turmoil in mid-February suggesting that the EUR/USD could strengthen a bit further near term”.
“Fundamentally, EUR/USD is supported by valuations and current account differentials but we think that relative rates will cap EUR/USD strength”.
“Note that the euro zone April core CPI was revised lower to 0.7% y/y, which should worry the ECB and it may lower its inflation forecasts at the next meeting in June”.