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Sep 05 - 06:55 PM

Danske Bank: EUR/USD Trading Strategy Amid ECB and Fed Decisions

By eFXdata  —  Sep 05 - 03:00 PM

Danske Bank outlines its trading strategy for EUR/USD, considering the upcoming European Central Bank (ECB) policy meeting and the Federal Reserve's stance. Despite anticipating a 25 basis point hike in the ECB policy rates, the bank remains bearish on EUR/USD and advises selling any tactical rallies based on the weaker growth fundamentals in the euro area.

Key Points:

  • Upcoming ECB Rate Hike: Danske expects the ECB to increase its deposit rate by 25 basis points on September 14, marking a peak rate of 4.00%.

  • Fed on Hold: With the Federal Reserve expected to remain on hold, relative rates could provide some short-term support to EUR/USD.

  • Weaker Growth Fundamentals in Euro Area: Recent data indicate a softening economic backdrop in the euro area, which underpins Danske's bearish outlook on EUR/USD.

Trading Recommendations:

  • Sell Tactical Rallies: While short-term factors might support EUR/USD, Danske recommends selling any tactical rallies in the pair. The bank's strategy is primarily influenced by the weaker growth fundamentals in the euro area.


For Traders:

  • Beware of Short-Term EUR/USD Strength: While the ECB's likely rate hike and the Fed's pause could provide temporary boosts to EUR/USD, Danske Bank advises that these should be viewed as selling opportunities rather than sustainable uptrends.

  • Monitor ECB and Fed Announcements: Upcoming policy meetings from both central banks could create short-term volatility. Traders should stay informed to adapt their strategies accordingly.

For Policymakers:

  • Growth Concerns in Euro Area: Policymakers should be cautious about the weakening economic landscape in the euro area, as it has implications for monetary policy decisions.


Danske Bank anticipates that the ECB will hike rates on September 14, and with the Fed expected to remain on hold, this could provide some short-term support to EUR/USD. However, based on weaker growth fundamentals in the euro area, the bank maintains a bearish view on the pair and advises selling any short-term, tactical rallies.

Danske Research/Market Commentary


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