EUR/USD seen lower in the medium term – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, assessed the prospects for the pair in the short to medium terms.

Key Quotes

“Trumps long awaited speech late last night US time did not bring much new in terms of details on tax and spending policy, and price actions in the majors have been relatively modest overnight”.

“Hawkish comments from FOMC members Dudley and Williams suggesting that a March rate hike is still an option for the Fed supported the USD and has sent EUR/USD down towards the 1.0550 level this morning. As such, we still see EUR/USD grinding lower in the coming months targeting 1.05 in 3M as support to the common currency is likely to remain weak ahead of the French presidential elections in April and May”.

“However, the two key drivers for a lower EUR/USD in the near term (US tax policy and FOMC reprising) look increasingly exhausted with a March rate hike from the Fed now priced with a two-third probability and given that it might take some time before the Trump administration is ready to announce more details on its spending and tax plans”.