EUR/USD faces a potential test of 1.1510 – Danske Bank
Senior Analyst at Danske Bank Mikael Milhoj noted the pair could attempt a test of YTD lows in the 1.1510 area in the next days.
Key Quotes
“EUR/USD in a rather subdued reaction to the otherwise across-the-board strong US job report on Friday, keeping the 1.15s at bay for now”.
“With the Italian issue set to remain a lingering concern as markets await a political programme from the new government formed on Friday, on the back of the recent data stream confirming the strength of the US economy, we still stress the case for USD strength near term, notably against the euro, and emphasise that our EUR/USD forecasts are under review”.
“It does appear however that the re-emerge of the trade-war issue after the latest tariff announcements may be helping to constrain USD appreciation a bit; after all, it is a reminder that the Trump administration is eager to reduce the US current -account deficit: the easy way out is clearly a weaker dollar and smaller-scale tariffs may be regarded a form of verbal intervention in this respect, but more importantly the America-first rhetoric continues to challenge the reserve-currency status of USD”.
“We stress that if a full-blown tit-for-tat trade war evolves, it is no longer certain to weigh on USD. Crucially, we also note that the recent moves in US yields and its recoupling with USD crosses is a reminder that both the cyclical and rate environments are set to favour USD for some time still. A new test of last week’s low of 1.1510 could be on the cards for this week”.
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
