EUR/USD seen rangebound within 1.15/1.20 – Danske Bank

Senior Analyst at Danske Bank Jens Pedersen believes the pair should keep gravitating between 1.15 and 1.20 for the time being.

Key Quotes

“While neither Yellen nor Draghi delivered any new hints on policy as such, the lack of comments from Draghi regarding the strong euro sent EUR/USD above 1.19 for the first time since early 2015, i.e. just before QE was announced”.

“It is tempting to line up the USD-positive factors near term such as, notably, the likelihood that markets will in our view soon need to price a December Fed hike and that the US economy is re-gaining momentum, but we stress that any dips in EUR/USD are likely to prove shallow and short-lived (1.15-1.20 range to hold) due to the omnipresent upside longer-term risks stemming from: (1) a fundamental undervaluation that still has to be corrected further and (2) a reversal in portfolio flows as ECB exits”.