Regardless of political noise out of Germany, EUR/USD held agency as markets eye the Fed for hints of dovishness and stay positioned for additional USD weak spot over the 12 months, Danske Financial institution’s FX analysts report.
Fed in focus as dovish threat looms
“Yesterday’s session proved a poor one for the USD and regardless of the slight German coverage scare on Merz not profitable the primary chancellor vote EUR/USD nonetheless ended the session solidly greater across the 13.50-level.”
“Right this moment focus will flip to the FOMC assembly this night. Our base case entails little change to the USD upon announcement/the press convention though the stability of threat might be skewed in direction of a slight dovish shock and therefore a weaker buck.”
“We see EUR/USD transferring greater over the approaching 12 months with a 12M goal of 1.22, and 10y UST yield declining to 4.20%. Upside dangers to yields are extra associated to the time period premium element, than risk-neutral fee expectation. Lastly, we don’t anticipate adjustments to the QT after the taper announcement in March.”
