EUR/USD upside could spark jitters in the ECB – Danske Bank

Sverre Holbek, Senior Analyst at Danske Bank, noted the recent EUR appreciation could prompt some warnings from the ECB.

Key Quotes

“EUR/USD broke 1.20 yesterday albeit falling back a bit later in the day, this significant move on a day where North Korean tensions surfaced yet again while there were no apparent EUR- or USD-specific news suggests that the FX market is currently more willing to price in the Fed softer (even if the scope for that should be very limited) than to reprice the ECB”.

“However, the current pace of EUR appreciation should pose a rising problem for the ECB and we would not be surprised to hear Mario Draghi and co mention this as a worry again at the September meeting. This should help to put a lid on the pair near term”.