Danske Bank anticipates increased volatility for EUR/USD in the upcoming weeks, attributing this to pivotal data releases that will shape monetary policy decisions by both the Federal Reserve and the European Central Bank.

Key Points:

1. Data-Driven Movements: Given the pronounced data-dependency of both the Fed and ECB, Danske forecasts heightened sensitivity of EUR/USD to key data releases.

2. USD Outlook: With the US economy demonstrating resilience, the prospect of rate cuts may be pushed further out than current market expectations. The ongoing battle against inflation, combined with the economic sturdiness, could underpin the USD.

3. Key Data Releases: The week's spotlight will shine on economic metrics, notably inflation and job figures. The US jobs report is poised to be a central point of interest, where robust employment statistics might offer additional tailwinds to the USD.

4. Euro Area Watchpoints: The July Consumer Price Index (CPI) will be in focus for the Euro. Furthermore, any indications of waning economic vitality in the Eurozone may exert downward pressure on the EUR, especially as growth disparities between the US and Eurozone become more pronounced.

5. EUR/USD Forecast: Danske reaffirms their longer-term stance, predicting a downward trajectory for EUR/USD, targeting levels of 1.06 and 1.03 in 6 and 12 months, respectively.

Summary:

Danske Bank envisions a turbulent period for EUR/USD, influenced significantly by forthcoming data publications. The bank emphasizes the US economy's robustness, which could delay anticipated rate cuts and bolster the USD, especially if the US jobs report impresses. Concurrently, the Euro remains susceptible to potential economic headwinds, and growth divergence between the two economies might play a pivotal role in steering EUR/USD movements. Danske remains bearish on EUR/USD in the medium term,