EUR/USD: Potential catalysts can drive additional gains in the pair – Danske Bank

FXStreet Insights Team FXStreet

EUR/USD has largely stabilized around the 1.08 mark following this week's rally, driven by the seismic shift in fiscal spending in the euro area, Danske Bank's FX analyst Kirstine Kundby-Nielsen reports.

Further upside potential for EUR/USD on a tactical basis

"As expected, the ECB meeting had a limited impact after the widely anticipated 25bp rate cut. The central bank maintained a meeting-by-meeting approach with no pre-commitment to a specific rate path. However, a shift in the ECB's statement, describing policy as now 'meaningfully less restrictive,' signalled that the current rate level is closer to the terminal rate, initially providing a slight boost to EUR/USD."

"Today, the focus shifts to the US NFP report for February. We expect a print of 120k, below the market consensus of 160k - a downside surprise that, if realized, could put downward pressure on US yields and the broad USD. Overall, we see further upside potential for EUR/USD on a tactical basis."

"While EUR optimism from increased fiscal spending may now be largely priced in, potential catalysts such as a ceasefire deal in Ukraine or a further deterioration in the US cyclical macro outlook - especially the latter - could drive additional gains in the pair over the next 1-3M."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.