EUR/USD potential correction ahead of a test of 1.14 – Danske Bank

Analyst at Danske Bank Aila Mihr sees the pair deflating in the near term ahead of a potential leg higher to 1.14.

Key Quotes

“The key story in FX markets is the EUR/USD rebound above 1.08 driven by a combination of a ‘dovish’ Fed hike, speculations of an earlier-than-anticipated ECB hike and Emmanuel Macron gaining in French opinion polls”.

“EUR/USD has not traded above 1.08 on a sustained basis since before the US presidential election and with the outlook for near-term fiscal easing in the US fading we have called for the cross approaching a base”.

“In the very near term, however, the move does seem slightly overdone relative to the coinciding move in rates, positioning and risk appetite. Hence, we think better opportunities to reposition for an eventual move towards 1.14 (our 12M forecast) are likely to emerge”.