EUR/USD: Still forecast at 1.10 in 3M after FOMC – Danske Bank


According to analysts from Danske Bank, the EUR/USD pair dropped on “a hawkish” Federal Reserve. The central bank cut rates as expected but they point out there was a lack of commitment to more cuts. 

Key Quotes: 

“USD rates moved higher on the FOMC meeting on lack of commitment to more rate cuts this year. Before the meeting, the market was pricing about a 50% probability of another 25bp cut in October and December respectively. In addition, USD rates were pushed higher by lack of actions from Fed to resolve pressure on short-term USD funding rates. Consequently, EUR/USD dropped some 40-50pips down to around 1.1020 as higher USD rates supported USD on broad basis.”

“We stick to our 3M forecast of 1.10 for EUR/USD. We still look for more rate cuts from Fed, which should eventually support a higher EUR/USD. However, the easing package, and in particular strong forward guidance, from ECB last week does add some counterweight to more Fed easing. In the near-term, there is room for the pair to trade lower if Fed actively attempts to steer the market away from expecting more rate cuts, but also for the pair to move higher if data weakens and the market starts to price more Fed cuts again.”

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD: trade war optimism skews the risk to the upside

The EUR/USD pair has rallied to 1.1062 on Friday, its highest since September 20, as risk-on prevailed heading into the weekend. Reports on progress in trade talks between the US and China.

EUR/USD News

GBP/USD's rally stalls in the open as weekend headlines highlight Brexit deadlock

GBP/USD is a touch softer in the open on Monday, starting off the week in the consolidation of Friday's upside extension to the highest levels since mid-summer. 

GBP/USD News

USD/JPY consolidating bull rally into 108 handle on US/Sino trade deal optimism

USD/JPY starts out the week flat to Friday's close after markets rallied at the end of the week. Bullish geopolitical undertones in the form of a U/Sino 'phase 1' trade deal help lift USD/JPY onto the 108 handle.

USD/JPY News

Gold slumps below $1,480 as risk appetite continues to dominate the market

The bearish pressure surrounding the XAU/USD pair on Friday intensified in the last hour as markets continue to price a possible trade deal between the United States (US) and China.

Gold News

US China trade deal propels US markets and yields higher and leaves dollar mixed

The US and China reached a limited trade deal on Friday a first step on the path to what both sides said could be a more comprehensive pact later in the year. President Trump said the countries reached a “very substantial phase one deal”.

Read more

Forex MAJORS

Cryptocurrencies

Signatures