EUR/USD: Under continued downward pressure – Danske Bank
|Chief Analyst, Jens Peter Sørensen at Danske Bank, explains that EUR/USD is under continued downward pressure as the USD weakness trend has been challenged by a continued uptick in US yields: whereas the latter has until recently been driven by rising US inflation expectations.
Key Quotes
“We may be starting to see the first signs of the market pricing the Fed slightly more aggressively; the tone of today’s FOMC minutes could be key in determining whether USD support from this angle could be sustained near term. In yesterday’s FX Strategy - How to position for short-term rise in USD hedging costs, we further highlight that tighter USD liquidity is another factor that could weigh a bit on EUR/USD near term, and we reiterate the case for using risk reversals to hedge near-term USD assets/income.”
“We also note though that US Treasury auctions are key to watch at present: if we see low bid-to-cover ratios then it will be a signal of heightened worries over the US fiscal position. This is a possible USD negative looming (again).”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.