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Apr 24 - 02:55 PM

Danske: Expecting Limited Near-Term Gains for EUR/USD

By eFXdata  —  Apr 24 - 01:30 PM


Danske Bank provides an analysis of the EUR/USD currency pair, noting its stabilization within the 1.06-1.07 range and potential for limited near-term gains following weaker-than-expected US PMI data. Despite ongoing discussions about the possibility of EUR/USD reaching parity, Danske maintains a bearish outlook but does not foresee parity in the near future due to differing rate expectations between the Fed and ECB.

Key Points:

  • Recent Market Movements: EUR/USD has shown some resilience this week, stabilizing in the 1.06-1.07 range. The pair briefly surpassed the 1.07 mark following disappointing PMI data from the US, which sparked doubts about the strength of the US economy compared to the Eurozone.

  • Impact of US and Eurozone PMIs: The US composite PMI declined to 50.9 in April, below consensus expectations and previous figures, hinting at potential economic softening. Conversely, the Eurozone composite PMI exceeded expectations, suggesting a more robust economic performance, particularly in the services sector.

  • Discussion on EUR/USD Parity: Despite market speculations and a rise in the option-implied probability of EUR/USD reaching parity this year, Danske Bank remains skeptical of this scenario. The bank highlights divergent monetary policies as a key factor supporting the euro against the dollar.

  • Central Bank Rate Expectations: Expectations for a Fed rate cut this summer, which are currently undervalued according to Danske, could provide additional support to EUR/USD. However, any gains are expected to be limited. ECB rate cut expectations remain steady, with significant cuts anticipated by year-end.

  • Outlook and Strategy: While Danske maintains a long-term bearish view on EUR/USD, the bank acknowledges that immediate factors, such as softer US economic data and stronger Eurozone activity, might lend some support to the euro in the short term.


Danske Bank's analysis suggests that while EUR/USD may see some limited upward movement in the near term, broader economic and monetary policy divergences will continue to influence the currency pair's trajectory.

Danske Research/Market Commentary


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