EUR/USD still seen rangebound near term – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, expects the pair to remain sidelined between 1.04 and 1.10 in the short term.

Key Quotes

“EUR/USD remains supported by higher EUR interest rates as selling pressure in the European fixed income markets continues, and the cross rallied to a new five-month high at 1.0950 yesterday”.

“While the cross could remain supported going into the ECB meeting tomorrow amid speculation that the ECB could send small signals towards reducing monetary stimulus, we still look for the 1.04-1.10 range to hold in the coming one to three months”.

“We expect a slightly dovish tone from Mario Draghi at the meeting, as the main message should be that the ECB is on autopilot with its current monetary policy”.

“Moreover, we note that the announcement of the Trump administration’s tax plan, which is due today, could be another potential negative for EUR/USD if investors buy in to the plan. Note, however, that the full tax plan will not be released until June, and we still expect Trumponomics to come later and be smaller than pledged due to disagreement within the Republican party”.