Senior Analyst at Danske Bank Mikael Miljoj suggested that dips in spot should remain shallow and could be regarded as buying opportunities.
“EUR/USD came under continued downward pressure yesterday following a Reuters story regarding the ECB’s euro concerns ahead of next week’s meeting. While we stress that ECB worries over the pace of EUR appreciation is indeed likely to take centre stage for the FX market into next week's ECB meeting, we maintain that dips will be shallow and short-lived as the underlying forces for euro strength are strong in the current environment”.
“In our view, this means it will require an ECB that is willing to backtrack on exit talks and dig deeper yet into its toolbox in order to stem a continued EUR/USD uptick”.
“As it is not our call that such a significant retreat will materialise, we stress that the cross is a buy on dips”.
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