EUR/USD expected to hold around 1.1479 – Danske Bank

In opinion of Christin Tuxen, Chief Analyst at Commerzbank, the pair’s downside is seen facing decent support in the 1.1480 area.

Key Quotes

“EUR/USD traded with a down tone yesterday, briefly breaking the 1.1555 support level and thus now below the levels seen right after the ECB’s October taper was announced”.

“Relative rates could support the USD and a US tax reform boost US growth into 2018, and we acknowledge the potential for EUR/USD to break lower near term with a break below the 1.15 level not to be ruled out, e.g. if taxes spur renewed belief in the expansionary nature of Trump policies and lift long-term rates”.

“We still look for the support at 1.1479 to hold near term though. Indeed, we note that short-term rates have failed to explain much of the move in the cross this year and we are not particularly optimistic on positive (expansionary) surprises from the tax reform committee. Also, our short-term financial model now in fact suggests the cross is oversold and that long EUR/USD positioning is much lighter than just a few weeks back”.