EUR/USD to remain in range near term – Danske Bank

Sverre Holbek, Senior Analyst at Danske Bank, gave his view on the prospects for the pair in the near term.

Key Quotes

“We do not expect any significant reaction in EUR/USD on the ECB’s QE recalibration announcement today given the substantial repricing of euro area monetary policy in the FX market seen over the summer”.

“That said, scaling down the QE scheme should add to the market sense that the ECB is ready to take tapering talk to the next level and thus cement the perception that led markets over the summer that Mario Draghi etc. are heading for the exit, albeit slowly”.

“We thus still see EUR/USD around current levels on a 1-3M horizon. In order to see a significant jump in EUR/USD today we are likely to need to see changes to the current forward guidance (not our baseline call). Longer term, we continue to stress that a 2018 rebound towards 1.25 is on the cards as upside risks still dominate the longer-term outlook”.