Flash: EUR/USD still facing upside risks - Danske Bank

FXStreet (Barcelona) - Flemming Jnielsen, Senior Analyst at Danske Bank notes that while his baseline scenario remains an ECB cut in both the refi and deposit rate in March (or April) and for the Fed to go on with tapering despite bumps on the road to recovery, we acknowledge that risks are now increasingly on the upside for EUR/USD.

Key Quotes

“These stem from both the Fed and the ECB outlook: ECB may not cut if disinflation is seen as mainly supply-driven and Fed may pause tapering if softness in US data continues.”

“We conclude that the likely FX implications of this so-called risk scenario are that EUR, AUD, GBP and, possibly, NOK are prime candidates for upside against USD.”