The Federal Reserve has clearly signalled forthcoming easing according to Danske Bank analysts. They expect a 25bp rate cut in July and an additional two rate cuts before year-end point and mentioned: “this will contribute to sending the USD weaker as the carry attractiveness of the USD diminishes.”
Key Quotes:
“The Fed is now clearly saying it will lower rates to keep the record-long expansion going and mitigate the ongoing weak global growth numbers.”
“We do not expect global data to turn around for the better and see little risk of an end to the trade war anytime soon. Fed should hence stay dovish and pave the way for a continued trend higher in EUR/USD. However, a trade deal would also be USD negative.”
“A trade deal and a ‘decent Brexit’ would be positive for the Eurozone and could pave the way for positive surprises later in the year, as a lot of negativity is priced in on the euro political side. The ECB is trying to talk down EUR/USD but we expect these efforts to have only secondary effect.”
“External balances, as measured by relative current-account balances, hint at EUR/USD upside medium term but as history suggests, a deficit is sustainable for prolonged periods, notably for a world reserve currency such as the USD.”
“On 1-3M, Fed initiating an easing cycle will do most of the lifting, while on 3-6M a US-China trade deal should weaken USD. We see EURUSD at 1.14, 1.15, 1.17 and 1.17 in respectively 1M, 3M, 6M and 12M.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD rises to near 1.2540, driven by higher UK GDP
GBP/USD edged higher to near 1.2540 during Asian hours on Friday, buoyed by the release of higher-than-expected UK Gross Domestic Product (GDP) data for the first quarter.
EUR/USD: The crucial resistance level will emerge at the 1.0790–1.0800 region
The EUR/USD pair trades on a softer note near 1.0775 during the early European hours on Friday. The downtick of the major pair is supported by the renewed US Dollar demand amid hawkish comments from Federal Reserve officials.
Gold price attracts some buyers despite hawkish Fedspeak
Gold price edges higher for the second consecutive day on Friday. Weak employment data bolstered the speculation that the weakening economy would force the Fed to cut rates.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Rate cut optimism fuelled by higher US jobless claims
With Federal Reserve policy acting as the primary driver of investor sentiment in 2024, renewed optimism surrounding the possibility of rate cuts has propelled the Dow to its most significant rally since December.