EUR/USD likely to navigate within 1.21-1.26 – Danske Bank

Mathias Mogensen, Analyst at Danske Bank, believes the pair could be establishing a new trading range, likely between 1.21 and 1.26.

Key Quotes

“EUR/USD is in our view now establishing a new range, 1.21-1.26, in which to trade over coming months”.

“However, the EUR/USD uptick is in our view set to be resumed in Q2 as commercial flow support kicks in (again) driven by a trough in euro inflation and ECB adjusting forward guidance more aggressively”.

“We underline that a US spending bill is set to widen basis and strengthen the case for hedging USD assets/income in longer-dated forwards, but, for the near term, consider shorter-dated risk reversals as an alternative to hedging with forwards”.