Danske Bank analysts see the EUR / USD pair trading in the 1.07-1.11 range, with risks tilted upwards after recent events.
“In our opinion, the recent underperformance of EUR / USD stems clearly from the internal struggles between the EU institutions and concerns related to what we consider to be the necessary monetary and fiscal measures. This means that a negative risk premium has built up in EUR / USD cash. However, for the past few weeks, this story has been well rated in the spot and options markets and we have kept our assessment slightly more optimistic. “
“Our longer-term assessment is not motivated by talks on the EU budget or the ECB, but rather by the outlook for global reflation, as reflation reduces the debt burden, leads to a more fluid policy and financial flows tend to be positive in EUR. We continue to see the EUR / USD trading around 1.09 +/- 2 digits, but the financial trends towards reflation and the appeasement of European policy could place us in the upper part of such a band , at least for a few weeks. “