Economists at Danske Bank make no changes to their Fed call, see no rate cuts this year and expect EUR/USD to fall to 1.06 in six months.
A hawkish 50 bps hike from the ECB could still drive EUR/USD higher in the near-term
“For now, we stick to our view that the Fed will maintain rates unchanged for the remainder of the year.”
“With markets pricing around 72 bps worth of cuts for the rest of the year, if we are right in our call, relative rates should add broad support to the USD in H2. Combined with relative terms of trade, growth differentials and relative unit labour cost, we expect EUR/USD to head lower towards 1.06 in 6M. That said, a hawkish 50 bps hike from the ECB today could still drive the cross higher in the near-term.”
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