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Feb 18 - 09:55 AM

EUR/USD: A Shift In Market Narrative Towards US Outperformance - Danske

By eFXdata  —  Feb 18 - 08:12 AM

Danske Research discusses EUR/USD flags as shift in market narrative towards US outperformance and more gains on the USD leg accordingly.

"Markets continue to look through the current COVID-19 situation, although risk-off movements in late-January stirred up markets for about a week on a combination of stretched positioning and recovery-delay fears. However, risk sentiment recovered fast as markets continue to price a very positive scenario for H2 on US fiscal stimuli, rollout of vaccines, and the eventual reopening of economies," Danske notes. 

"EUR/USD has moved lower since the peak in early January and has briefly been below 1.20. We view this as a shift in the market narrative towards our view of US economic outperformance due to the outlook for fiscal easing, a strong US vaccination process, and potential for a fast labour market recovery, while EU is lagging behind due to a slow vaccination process and fading export tailwinds from a slowing Chinese expansion," Danske adds. 

Source:
Danske Research/Market Commentary

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