EUR/USD: Possible test of 1.06 – Danske Bank

EUR/USD took another dive yesterday, after a strong US Empire reading, and notably broke below 1.08. Jakob Ekholdt Christensen, a Chief Analyst at Danske Bank, still thinks the downside momentum for the pair remains. 

Key quotes

“Downside momentum in the cross thus remains intact as US outperformance growth- and equity-wise dominate amid room to price out Fed cuts and positioning-wise to add USD longs.”

“Technically, the move opens for a possible test of 1.06 next, which would be an undershooting of our 6-12M target of 1.07.”

“Near term, watch out for Fed speakers and minutes today but also Trump comments on the weak euro that the rapid EUR depreciation could make the US more susceptible to target EU with e.g. auto tariffs.”