EUR/USD: EUR leg may still prove a drag on the cross – Danske Bank

Ahead of the announcement of Fed’s easing package and the coordinated G6 USD liquidity action last night, EUR/USD was under pressure from all sides, economists at Danske Bank apprise.

Key quotes

“The key ‘surprise’ risk of a Fed cut materialised and EUR/USD jumped a rough big figure on impact.”

“The big question now is whether this will be enough to ease the credit/funding stress that EUR/USD has begun to trade on last week.” 

“It may alleviate the USD funding issues near term, but after the ECB re-opened the sovereign-risk factor for EUR last week, the EUR leg may still prove a drag on the cross - not least if the call upon EU fiscal policy is overheard by politicians.”