EUR/USD seen rangebound in the short term – Danske Bank

Senior Analyst at Danske Bank Christin Tuxen sees the pair extending the current consolidative theme in the near term.

Key Quotes

“The somewhat weak US CPI figures on Friday sent EUR/USD above the 1.18 level in late trading”.

“We maintain that the cross is set to be rangebound near term as positioning according to IMM is increasingly stretched on USD shorts and EUR longs. Notably we see the potential for markets to price the Fed much weaker as limited near term unless the US-North Korea spat grows much more tense”.

“On a broader note, we think the economic outlook is now improving in the US which could lend support to the USD in coming months”.

“In the majors, focus now turns to the ECB and Fed minutes this week, and to Jackson Hole and the September ECB meeting further out, but we continue to stress that the key trend in the FX market remains continued pricing of an end to ECB easing (however distant this may still seem in terms of actual rate hikes) – and EUR/USD is still a longer-term buy on (any) near-term dips”.