Danske Research discusses EUR/USD outlook and maintains a strategic bearish bias, while staying sidelined in the very near-term.

"EUR/USD rose to just below the 1.10-mark on the back of yesterday's overall slightly weaker-than-expected US CPI print...The market pricing for the Fed meeting in May was little changed, pricing 17bp of rate hikes for May, down 1bp from before the CPI print. We still believe in a 25bp rate hike in May. More notably, rate cuts were added for the rest of the year. The market now prices 72bp of rate cuts from the May peak to the December meeting, as an additional 13bp of rate cuts were added after the CPI print. Overall, it seems the market are eyeing the end of Fed's hiking cycle and focus are increasingly turning on rate cuts, which we think is premature," Danske notes.

"A lot of rate cuts are now priced starting from July. Barring a quite significant negative growth shock and/or a re-escalation of banking sector concerns, there may be too many rate cuts priced in our opinion, and hence it could be a USD positive. We remain bearish the EUR/USD on a strategic horizon, while we are side-lined in the very near-term," Danske adds.