2 Jun 2014
EUR/USD aims for 1.3000 – Danske Bank
FXStreet (Edinburgh) - In the opinion of the research team at Danske Bank, the EUR/USD could hit 1.30 in the near term.
Key Quotes
“A continuously decline in euro zone excess liquidity through 2013 and 14 has been an important driver behind the uptrend in EUR/USD”.
“Thus, while lower euro rates is expected to weigh on the euro, a new ECB liquidity boost may potentially be very euro negative”.
“As we expect the US recovery to gain momentum in H2 14, we see potential for a steepening of the US money market curve. Hence, divergent monetary policy between EU and US should become more evident in H2, and higher US rates is expected to support the case for a lower EUR/USD over the medium term horizon”.
“Given the current Fed funds pricing, we see risks skewed to the down side relative to our three to 6 months forecasts. Sell EUR/USD spot @ 1.3626 for a 1.30 target. Stop @ 1.38”.
Key Quotes
“A continuously decline in euro zone excess liquidity through 2013 and 14 has been an important driver behind the uptrend in EUR/USD”.
“Thus, while lower euro rates is expected to weigh on the euro, a new ECB liquidity boost may potentially be very euro negative”.
“As we expect the US recovery to gain momentum in H2 14, we see potential for a steepening of the US money market curve. Hence, divergent monetary policy between EU and US should become more evident in H2, and higher US rates is expected to support the case for a lower EUR/USD over the medium term horizon”.
“Given the current Fed funds pricing, we see risks skewed to the down side relative to our three to 6 months forecasts. Sell EUR/USD spot @ 1.3626 for a 1.30 target. Stop @ 1.38”.