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Jun 08 - 02:55 PM

EUR/USD: Current Uptick Likely A Permanent Level Shift But Tactical In Nature; Where To Target? - Danske

By eFXdata  —  Jun 08 - 01:15 PM

Danske Research sees a scope for EUR/USD to extend gains towards 1.15 over the coming weeks. 

"We view the current uptick in EUR/USD as a permanent level shift (tail risks have faded) but as tactical in nature, as other drivers are likely to enter the stage in the coming months. In our view, longer-term issues have still to be addressed within core European industries (autos, banks, etc.), Brexit remains unresolved and Italy may enter new debt sustainability discussions by year-end. Further, positive macro surprises in the US may help to stem USD weakness. Lastly and most importantly, we have yet to see real commitment from the Fed to pursue inflation overshooting. If we change our view on the latter, we would change our view on the slope of the profile," Danske notes. 

"We do not see much standing in the way of going to 1.15 - helped by speculation of a Brexit compromise - even if the latter is unlikely to be delivered near term, in our view," Danske adds.

Danske Research/Market Commentary


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