The euro outperforming its main peers on Thursday, boosted by the ECB’s decision to step up its coronavirus emergence stimulus package. According to the Danske Bank FX strategy team, the pair would be heading towards 1.1400.
“We now have more ECB easing but a stronger EUR. In our view, this is arguably so as these actions indeed cap macroeconomic tail risks. Thus, the decline in uncertainty becomes a propellant of FX strength.”
“To keep the rally in EUR/USD going, the global investment environment needs to continue to favour a rotation towards ‘undervalued’ assets (…) Simply put, we need at least one of DAX, TRY, ZAR or BRL to continue to rise some 1-2% a day to further support EUR but this may stick with us a while longer.”
“Indeed, currently, we do not see much standing in the way of going to 1.14 – helped by speculation of a Brexit compromise – even if the latter is unlikely to be delivered near term, in our view.”
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