Danske Bank: EUR/USD: Roadblocks For A Continued Surge

25.05.2017 / 14:12

Rating:

Danske Bank FX Strategy Research notes that sentiment towards EUR/USD has changed as the recent surge has been driven by political risks reversing and by euro-area growth and equity outperformance.

Speculators have changed their minds…

"Since late 2016 speculators have markedly changed their attitude towards the euro: shorts have been covered and in early May non-commercial positioning in EUR turned net long for the first time since 2014. This suggests that risks are now roughly balanced for EUR/USD from a pure positioning point of view," Danske notes.

What are the roadblocks for a continued EUR/USD surge?

"Sentiment-/growth-related flows have seemingly been key in taking EUR/USD to this side of the 1.10 level, but we stress the potential for central banks to halt the uptick over the coming weeks.

In our view, it is a little too early for the ECB to signal an easing exit, and Fed is determined to move on with rate hikes and Quantitative Tightening (QT)...An ECB not ready to change signal on rates, and a Fed determined to both hike and initiate Quantitative Tightening should keep the cross in the 1.08-1.14 range within 3M," Danske argues.

Source: Bloomberg Pro Terminal

Junior Trader Stefan Panteleev

Varchev Traders

Read more:

RECCOMEND WAS THIS POST USEFUL FOR YOU?
If you think, we can improve that section,
please comment. Your oppinion is imortant for us.

WARNING: Any news, opinions, research, data or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. Varchev Finance Ltd. expressly disclaims any liability for any lost principal or profits which may arise directly or indirectly from the use of or reliance on such information. Varchev Finance Ltd. may provide information, quotes, references and links to or from other sites and blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the sites, blogs or other sources of information.

Varchev Finance

Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.

Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006

The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Disclaimer:

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Danske Bank: EUR/USD: Roadblocks For A Continued Surge

London

Universal numbers