EUR/USD: Strong forward guidance, a game changer - Danske Bank


The European Central Bank today announced an easing package. According to analysts from Danske Bank, the ECB regained credibility and they forecast EUR/USD at 1.10 on 1-3M.

Key Quotes: 

“In the short term, the combination of the rate cut and tiering could cause volatility in the short-term EUR money market, which could spill over to EUR/USD.”

“Over the medium-term, we think that the ECB regained some credibility today with its strong forward guidance, which makes EUR a more two-sided bet. We keep our forecast on 1-3M of 1.10.”

“The Fed meets next week, where we look for a 25bp cut in line with market expectations, but likely no strong precommitment to further easing which will could weigh on EUR/USD.”

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