Synopsis:

Danske Bank projects a near-term climb for the EUR/USD pair beyond the 1.08 level due to a combination of factors, including dovish central bank stances and a waning US dollar buoyed by a potential peak in policy rates.

Key Points:

1. EUR/USD Momentum: The currency pair is stabilizing above the 1.07 threshold following data that indicates a potential peak in the Federal Reserve's policy rates, moving the pair out of its previous 1.05-1.07 range.

2. USD Weakness: The US dollar is facing its sharpest decline since mid-July, spurred by a weaker-than-expected labor market and growing anticipation that central banks may not tighten policies as aggressively as once thought.

3. Economic Data Trends: Recent US economic data, including job figures and ISM surveys, suggest a downward trend, leading Danske Bank to foresee a dip in positive economic surprises from the US that could depress the USD and enhance the appeal of cyclical currencies like the EUR.

4. Testing New Heights: With the EUR/USD currently consolidating gains, the bank anticipates the pair might challenge the 1.08 mark in the coming weeks.

5. Upcoming Speeches: Remarks from Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde later in the week are poised to attract attention, potentially influencing the rate trajectory and currency movements.

Conclusion:

Danske Bank signals a bullish outlook for the EUR/USD pair in the near-term, driven by broader risk-on sentiment and a softer dollar. Traders and investors should pay close attention to forthcoming economic data and central bank communications for further direction.