EUR/USD after ECB: Still strategically long - Danske Bank

Analysts at Danske Bank expect the next change in forward guidance from the European Central Bank to come in July. They  continue to stress that EUR/USD remains at risk from stretched positioning and US cyclical outperformance on growth and rates alike. 

Key Quotes: 

“While EUR/USD edged lower to test January lows in the 1.2150 area into the press conference, the overall less soft-than-hoped-for tone from Draghi on growth sent the cross back towards the 1.22 mark yet again.”

“With the ECB eager not to steer any new EUR direction amid cyclical weakness and trade uncertainty, we continue to stress that EUR/USD remains at risk from stretched positioning and US cyclical outperformance on growth and rates alike.”

“These USD positives could put the 2017 high of 1.2092 at risk in coming months and we still see the pair as a tactical sell on rallies short term. That said, we remain strategically long the cross via options for a move towards the high 1.20s in 6-12M.”