EUR/USD still sidelined within 1.10 and 1.14 – Danske Bank

Sverre Holbek, Senior Analyst at Danske Bank, believes the pair is poised for an extension of the 1.10/1.14 range in the near term.

Key Quotes

“EUR crosses rose sharply in late European trading on the Bloomberg story that the ECB is considering tapering QE”.

“The ECB resident is due to give a press conference in Washington on 8 October where FX markets will look out for further signals. We continue to expect that at its meeting in December, the ECB will announce a six-month extension of its current QE programme until September 2017”.

“Near term, we could see further EUR upside particularly versus currencies where short EUR positioning is heavy such as versus NOK or where policymakers are still on an easing bias, e.g. SEK and GBP”.

“We see the upside break of the 0.8720-0.8730 range in EUR/GBP as providing further room to the upside. In EUR/SEK, we believe that the 9.67-9.73 area, which includes 2014 and 2015, will provide resistance”.

“We continue to see EUR/USD in a 1.10-1.14 range in line with our 1M and 3M forecast at 1.12”.