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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Editors’ Picks

EUR/USD: Bullish breakout faces next challenge at 1.1150

The EUR/USD pair closed the week at around 1.1100, its highest settlement in two months, as poor US data coupled with a relief rally of high-yielding assets ahead of the close. Several European countries will start the week celebrating a holiday.


GBP/USD: Post-Brexit relationship taking centre stage

The GBP/USD pair hit 1.2393 on Friday, a two week high, retreating sharply from the level ahead of Trump’s speech to later recover on relief and settle at 1.2345. Cable is technically neutral, although the bullish potential seems limited.


Cryptocurrencies: $348M in matured derivatives boost the market

Futures and options contracts' expiration brings a wave of volatility to the crypto market. Ethereum takes advantage and attacks resistances in the market dominance chart, Bitcoin goes back. Ripple disappoints despite regaining the third place in market capitalization.

Read more

Canada's economy falls by 8.2% annualized in Q1, better than expected, USD/CAD shakes

The Canadian economy squeezed by an annualized rate of 8.2% in the first quarter of 2020, better than -10% expected. Quarterly, Gross Domestic Product (GDP) squeezed by 2.1%. Most of the downfall occurred in March, with a drop of 7.2%, better than 8.5% projected. 

Read more

WTI drops 4% and eyes $32 mark amid risk-off, weakening demand

The selling pressure around WTI (July futures on Nymex) accelerates following the break below the 33 level, as bears now target the 32 support zone heading into the key US macro data and US President Donald Trump’s response to the Hong Kong issue.

Oil News