23 May 2014
EUR/USD potential for further pullbacks – Danske Bank
FXStreet (Edinburgh) - In the view of Kasper Kirkegaard, Chief Analyst at Danske Bank, the pair could still test lower levels.
Key Quotes
“EUR/USD declined further yesterday to around 1.3650, as the relative growth outlook indicated by the PMI in both Europe and the US favours the US dollar”.
“Moreover, 10Y peripheral bond spreads relative to Germany continued to widen yesterday. Flows into southern European government bonds have been a very important support factor for the euro so far this year and if investors’ appetite for peripheral bonds continues to fade, it might put further pressure on the euro”.
“Hence, further EUR/USD downside cannot be ruled out – although market’s expectations for ECB easing in June seem to be quite hard priced already”.
Key Quotes
“EUR/USD declined further yesterday to around 1.3650, as the relative growth outlook indicated by the PMI in both Europe and the US favours the US dollar”.
“Moreover, 10Y peripheral bond spreads relative to Germany continued to widen yesterday. Flows into southern European government bonds have been a very important support factor for the euro so far this year and if investors’ appetite for peripheral bonds continues to fade, it might put further pressure on the euro”.
“Hence, further EUR/USD downside cannot be ruled out – although market’s expectations for ECB easing in June seem to be quite hard priced already”.