EUR/USD expected at 1.08 in 3-month – Danske Bank

Chief Analyst at Danske Bank Allan von Mehren sees the pair slipping towards the 1.08 area in 3-month’s view.

Key Quotes

“We look forward to a week with important events that could have a significant impact on the EUR/USD cross with the FOMC meeting on Wednesday and important data releases on both sides of the Atlantic, including non-farm payroll data on Friday”.

“While we expect unchanged interest rates on Wednesday, the most interesting part will be the FOMC statement. Last year, the Fed more and less preannounced the December 2015 hike at the October meeting but, unlike last year, this time the markets have more or less priced in a Fed hike by year-end as much as possible at the current time given that there is still one and half months until the December meeting”.

“EUR/USD bounced sharply on Friday, which is likely to reflect short covering on the back of increasingly heavy short positioning. IMM data for the week ending last Tuesday suggests that speculators are getting increasingly short EUR/USD albeit still slightly shy of overstretched territory. We forecast EUR/USD at 1.09 in 1M and 1.08 in 3M and continue to see the cross as a sell-on-rallies near term”.