EUR/USD consolidated above the 1.09 mark after the German Bundestag approved the large fiscal package with a 2/3 majority, Danske Bank’s FX analyst Jens Nærvig Pedersen reports.
Risks still skewed to the upside
“This was largely expected by markets and the reaction in EUR/USD was muted. The package must now also pass the Bundesrat, which is the upper chamber of the parliament, in a vote on Friday. Here the bill is also expected to pass. “
“Today, focus turns to the FOMC meeting where we do not anticipate strong market reactions. We do not expect Powell to guide explicitly towards a cut in May, but we do still anticipate three 25bp reductions later in the year starting from June.
“We expect EUR/USD to consolidate around current levels in the near term, with risks still skewed to the upside. The key risk to further EUR/USD upside is that if upcoming data fails to validate market concerns about the US economy, the USD could rebound quickly.”
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