EUR/USD poised to appreciate in the longer run – Danske Bank

Jens Sorensen, Chief Analyst at Danske Bank, sees the pair under pressure in the near term although it could be set for further gains in the longer term.

Key Quotes

“The momentum in EUR/USD has stalled over the last week, halted by soft comments from the ECB’s Mario Draghi and fading focus on Donald Trump worries”.

“As we wrote, the medium-term valuation still points to further upside potential in 6-12M but near term the pair looks increasingly overbought and vulnerable to a roll-over in the European business cycle as pointed to by our business-cycle lead model”.

“Today’s inflation print out of the eurozone and more stories like yesterday’s Reuters news that the General Council is discussing its forward guidance should prove key for the near-term direction of the cross”.