EUR/USD rangebound likely between 1.10-1.14 – Danske Bank

Analyst Kristoffer Lomholt at Danske Bank expects the pair to remain within a 1.10-1.14 range in the short run.

Key Quotes

“EUR/USD broke above 1.1150 yesterday for the first time since last week’s strong US labour market report”.

“In recent months there have been many reasons for EUR/USD to fall including strong US NFP data and a repricing of the Fed, but the price action is telling”.

“The Europe-US current account differential is back at 2004-2006 levels and the EUR is fundamentally cheap. This implies that the 'natural flow' in EUR/USD is buying of EURs and selling of USD”.

“Political risk in Europe may not matter much as slowing European growth and bank de-leveraging may just be EUR supportive. We thus expect EUR/USD to trade in a 1.10-1.14 range near-term, breaking higher medium-term”.