EUR/USD to remain rangebound near term – Danske Bank

Senior Analyst at Danske Bank Morten Helt sees the pair keeping the sideline pattern in the short-term horizon.

Key Quotes

“We see EUR/USD around current levels on a 1-3M horizon but stress that risks to our 3-6M forecast of 1.19 remain on the downside with a key risk being the appointment of a more hawkish Fed Chair”.

“That said, we do not think EUR/USD has the potential to drop much further with 1.1660 (17-Aug low) a key support level and like to position for a 2018 rebound towards 1.25 (12M target) on Q4 dips, as upside risks dominate the longer-term outlook”.

“We recommend to hedge USD assets/income by moving further out the curve in either FX forwards, CCS, or using options (e.g. risk reversals) to reduce the cost of carry, which is likely to rise further”.