Danske Research likes to fade the recent price actions in USD and EUR.
"With European markets and value sectors having a strong end to last week it was no surprise to see EUR, NOK and other "value" currencies perform very well at the expense of not least the USD. Technically, momentum-indicators suggest that the rally could extend. Short-term the global environment seems fundamentally supportive of a stronger NOK, SEK and EUR. That said, we are highly sceptical as to the longevity of the move and this morning we have even seen a slight reversal," Danske notes.
"With public balance sheets seemingly set to cushion Europe from the energy shock - and hence keep real rates relatively depressed - the EUR FX will remain the pressure relief valve. The growth outlook remains bleak for the Eurozone and with central banks still firmly in front-loading panic mode it's rarely an environment where EUR, NOK and SEK rallies can be sustained. In sum, we will look to position for a reversal of recent price action," Danske adds.