Danske Research discusses EUR/USD outlook and maintains a tactical bearish bias.
"For EUR/USD, the most interesting event last week was of cause the round trip in spot after the ECB meeting. As, on Friday, spot dropped from 1.1690 to 1.1540. With EUR/USD back to where we started (and lower), we do not see any of the fundamentals as having changed and this is well in line with our view to fade the post-ECB price action. Indeed, we will continue to expect a near-zero (if not negative) correlation to rising European interest rates and EUR/USD. We will also continue to view sentiment and macroeconomic developments as negative amid an elevated spot. The weakness in Chinese PMIs are likely case-in-point for this," Danske notes.
"This week, focus will turn to US payrolls and the FOMC meeting. We expect both events to support USD, and in 12M we forecast EUR/USD at 1.10," Danske adds.