EUR/USD: Institutional risk priced in, now slightly unwinding – Danske Bank

Matías Salord FXStreet

Analysts from Danske Bank, see the EUR/USD pair trading in the range 1.07-1.11, with risks tilted to the upper end after recent events.

Key Quotes:

“In our view, the recent underperformance of EUR/USD has clearly derived from infighting among EU institutions and concerns related to what we regard as necessary monetary and fiscal measures. This has meant a negative risk premium has been building in EUR/USD spot. However, for a few weeks this story has been well priced into both spot and options markets and we have kept our slightly more upbeat assessment.”

“Our longer-term assessment is not driven by EU budget talks or the ECB but rather by the outlook for global reflationary trends, as reflation lessens debt burdens, leads to smoother politics and financial flows tend to be EUR positive. We continue to see EUR/USD as trading around 1.09 +/-2 figures but financial trends towards reflation and calming European politics may put us in the upper end of such a band, at least for a few weeks.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD revisits 1.1780, or daily lows

EUR/USD now comes under further selling pressure, breaking below the 1.1800 support to reach daily troughs on Thursday. The pair’s decline comes in response to a sudden bout of USD strength amid steady geopolitical tensions. Ealier in the day, the ECB’s Lagarde delivered cautious remarks, although the currency remained apathetic.

GBP/USD makes a U-turn, challenges 1.3500

GBP/USD rapidly leaves behind Wednesday’s strong advance, putting the 1.3500 support to the test on Thursday. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold sticks to the bid bias, flirts with $5,200

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The precious metal adds to Wednesday’s optimism despite the Greenback trades in a firm fashion, although geopolitical tensions in the Middle East keep the yellow metal bid for now.