EUR/USD could test 1.20 before 1.17 – Danske Bank

Arne Rasmussen, Head of FI Research at Danske Bank, sees the pair testing the 1.20 region in the short term.

Key Quotes

“EUR/USD has had an impressive 10% run since April while the market has re-assessed Trump’s ability to get his tax cut agenda through Congress (USD negative) and ECB has adopted a more hawkish tone where Draghi’s Sintra speech on 27 June prompted a substantial selloff in EZ rates (EUR positive)”.

“We will see 1.20 before 1.17 in our view but we need to see a push higher within the next 1-2 weeks. If not, the move could fade into the Jackson Hole in late August and the September ECB meeting”.

“A significant – and continued - EUR appreciation is not what the ECB needs right now. Hence, we may not be far from verbal interventions. One must also consider the risk that the ECB at some point simply wants to temper tightening expectations”.