Synopsis:

Danske sees limited further upside for EUR/USD around this week’s March FOMC meeting, as key drivers—including Germany’s fiscal shift and a potential Russia-Ukraine ceasefire—are largely priced in. While a ceasefire deal could lift EUR/USD further, markets already expect one this year, reducing its immediate impact. Additionally, the FOMC is unlikely to be a major market mover, with Powell expected to keep all options open, aligning with market expectations for three rate cuts in 2025.

Key Points:

1️⃣ Germany’s Fiscal Deal Already Priced In 🇩🇪

• The finalization of the German fiscal package this week is unlikely to move EUR/USD.
• Markets have already discounted the impact of increased spending.

2️⃣ Potential Russia-Ukraine Ceasefire Could Boost EUR/USD, But Impact Limited 🌍

• A deal could send EUR/USD higher, but markets already expect progress in 2025.
• The effect may be smaller than some anticipate.

3️⃣ FOMC Meeting Unlikely to Be a Big Market Mover 🏦

• Powell is expected to keep options open, reinforcing market pricing of three rate cuts this year.
• The Fed is not expected to signal an imminent move, limiting impact on EUR/USD.

4️⃣ EUR/USD Rally to 1.09 Has Come a Long Way 📉

• Danske sees limited further upside in the near term.
• Key drivers are already factored in, making additional gains harder to sustain.

Conclusion:

Danske remains cautious on further EUR/USD upside, as Germany’s fiscal shift and a potential ceasefire are mostly priced in. The March FOMC is unlikely to trigger major moves, and with EUR/USD already at 1.09, near-term gains appear limited.