The EUR/USD pair remained steady following the decision of the European Central Bank to raise rates by 50 basis points on Thursday. Analysts at Danske Bank see the pair at lower than current levels on a three to six months horizon.
Limited market reaction to the ECB
“Despite the large uncertainty with respect to the rate decision, the reaction in FX markets was remarkably limited. We entered the meeting with a fundamental predisposition of wanting to sell EUR/USD rallies on a 50bp hike but the cross hardly reacted with the FRA curve flattening upon announcement.”
“Looking ahead, systemic risk fears look set to dominate price action among majors. Our bias remains for systemic fears to subside over the coming weeks, but we humbly acknowledge the high sensitivity to negative news, which leaves us side-lined with no high-conviction calls near term. On a 3-6M horizon, we still pencil in a lower EUR/USD compared with current spot levels.”
“We expect the ECB deposit rate to peak at 4%, with a 50bp rate hike in May followed by a 25bp hike in both June and July.”
EUR/USD steady around 1.0600 after ECB; market mood improves
EUR/USD is consolidating around 1.0600 after ECB’s 50 bps interest rate hike and President Lagarde’s remarks on the policy outlook. Wall Street indexes and yields are rising, as market mood improves. The DXY is falling modestly, helping the pair remain around 1.0600.
EUR/USD News
GBP/USD climbs above 1.2100 as risk flows return
GBP/USD climbs above 1.2100 as risk flows return
GBP/USD has gathered bullish momentum and rose above 1.2100 after having dropped below 1.2030 earlier in the day. The sharp rebound witnessed in Wall Street’s main indexes following the mixed opening doesn’t allow the USD to find demand and provides a boost to the pair.
GBP/USD News
Gold: XAU/USD retreats as market mood improves, holds above $1,900 PREMIUM
Gold: XAU/USD retreats as market mood improves, holds above $1,900
Stop gold lost momentum and trades at around $1,918 a troy ounce after failing to overcome the monthly high posted this week at $1,930.32. Markets started the day in a better mood, as governments and central banks are taking steps to ensure banks’ credibility and prevent a steeper crisis.
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