EUR/USD under pressure, scope for further downside – Danske Bank

Analyst at Danske Bank Mathias Mogensen noted that further pullbacks are likely amidst increasing vulnerability around the single currency.

Key Quotes

“EUR/USD has continued to grind lower in a move which in our view is driven by two factors: (1) rising political uncertainty in the euro zone following the signals from Theresa May that the UK will opt for a hard Brexit. The Brexit negotiations are going to test the EU's cohesion with different parts of the EU having diverging priorities”.

“(2) The market is likely to remain focused on the Fed raising rates in December and with no major data this week, these expectations will drive USD strength”.

“Technically, a downside break of 1.1050-1.11 will open for a test of 1.0950- 1.1000. Short term, we expect EUR/USD to move lower still; medium term we continue to expect EUR/USD to move a lot higher towards 1.18 in 12M on valuation and C/A differentials”.