Danske Research maintains a bearish bias on EUR/USD over the medium-term.

"The US Treasury announced that the size of the first increased long-end buyback operation conducted today will be USD6bn. This was on the lower end of expectations, as it just barely fulfils the guidance for "more than doubling" the earlier amount of USD2bn. Furthermore, the Treasury did not provide guidance for later long-end operations that are conducted roughly every 1-2 weeks. Long-end UST yields ticked modestly higher, US swap spreads tightened and EUR/USD declined, but the moves were relatively contained compared to the August announcement. Brent oil price rose back above USD100/barrel, and other energy prices remain on the rise as well. European TTF natural gas price temporarily broke through EUR80/MWh for the first time since late 2022, and electricity futures prices in Northern Europe have also risen notably in September," Danske notes.

"Overall, euro area's commodity terms-of-trade have reached their weakest level since early 2023, and over the medium-term, we see further rise in energy prices as a relatively larger downside risk to EA growth outlook (vs. the US), and a negative driver for EUR/USD," Danske adds.