EUR/USD now looks to US debt ceiling – Danske Bank

Senior Analyst at Danske Bank Jens Pedersen assessed the prospects for the pair in light of the key US debt ceiling issue.

Key Quotes

“In the market for EUR/USD, the outlook for the EURUSD CCS next year will to a great extent depend on what happens after the current suspension of the US debt ceiling expires on Friday”.

“We are most likely headed for another period of a binding debt ceiling before a solution is found in February-March next year when extraordinary measures run out, in our view”.

“That in turn will contribute to keep the US treasury cash balance low and USD liquidity easy and limit a further widening of the EURUSD CCS in coming months. However, we also note that back in September the 3M suspension surprised the market”.