EUR/USD: Dec FOMC: Balance Of Risks N-Term & In 2018: Key Levels To Watch - Danske

Danske Research discusses EUR/USD outlook in light of today's FOMC policy decision.

"EUR/USD moved back above the 1.18 mark again and the US fixed income market reacted positively on the back of the FOMC’s dovish hike....

Near term, in light of the risk of continued tightening in USD liquidity ahead of year end, we stress that upside in EUR/USD should be capped and continue to see the cross staying within the 1.16-1.20 range in coming weeks.

Further, we stress that any downside to EUR/USD from relative rates in 2018 will likely be dominated by the pricing in the FX market of the ECB taking the next step towards ‘normalisation’ of policy. That leaves risks in EUR/USD chiefly on the upside for 2018," Danske argues.

Source: Danske Bank Research