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Mar 25 - 12:55 PM

Danske: Staying Strategically Bearish on EUR/USD, but Scope for Tactical Upside N-Term

By eFXdata  —  Mar 25 - 11:00 AM


Danske Bank outlines a nuanced view on EUR/USD, acknowledging the current market dynamics influenced by global real rates, recent central bank actions, and currency performance across the board. While maintaining a strategic bearish stance on EUR/USD for the medium term, Danske sees potential for near-term upside. This view considers the possible impact of an early Federal Reserve rate cut and reassesses market optimism towards US economic performance relative to Europe and China.

Key Points:

  • Global Rates and Currency Movements: The USD's correlation with global real rates continues, with EUR/USD hovering around 1.08. The recent Bank of England's dovish stance has pressured GBP, while Scandinavian currencies, notably NOK, have underperformed despite favorable conditions.
  • Central Bank Decisions: The Swiss National Bank's initiation of a cutting cycle propelled EUR/CHF to its highest level since July 2023, while the Japanese yen did not strengthen as expected after the Bank of Japan's anticipated rate hike, leaving USD/JPY unaffected.
  • Strategic vs. Tactical Outlook: Despite a bearish medium-term outlook for EUR/USD, Danske identifies a near-term upside. This perspective is driven by the potential for an early Fed rate cut and a recalibration of market expectations regarding the economic outlook in the US, Europe, and China.


Danske Bank differentiates between its strategic bearish perspective on EUR/USD and the possibility of near-term gains for the currency pair. Factors such as central bank policy directions, global rate movements, and reassessment of economic expectations contribute to this dual outlook. Danske's analysis suggests market participants may need to adjust their strategies to account for both short-term opportunities and longer-term trends in EUR/USD.

Danske Research/Market Commentary


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