EUR/USD: We expect it to continue in the 1.10/1.1350 range - Danske

Analysts from Danske Bank, expect the EUR/USD pair to continue to trade in the range between 1.10 and 1.1350 in the coming months.

Key Quotes:

“In the coming months, we expect EUR/USD to continue to trade in the ‘post-Brexit’ range of 1.10-1.1350. While political uncertainty is likely to cause higher volatility, we see little prospect of a big move in EUR/USD due to the outcome of the US election, as the political topics are more likely to have long-term than short-term implications for the US. As such, we see risks skewed to the downside in case the Fed hikes in December.”

“The market is pricing around 55% probability of rate hike in December, suggesting that this should not  be a big surprise. We expect that the potential rally in the USD following a US rate hike will be relatively shallow and short-lived. First of all, the pace of rate hikes will continue to be very shallow and secondly, investors are already very short EUR/USD according to the IMM data and EUR/USD tends to be less sensitive to relative rates when positioning is stretched, suggesting that the scope for a decline in EUR/USD might be limited.”

“We target EUR/USD at 1.12 in 1-3M”