EUR stays strong post-ECB, but… - Danske Bank

Chief Analyst at Danske Bank Allan von Mehren assessed the recent ECB meeting and its potential implications on EUR.

Key Quotes

“EUR/USD broke above 1.20 during the ECB’s press conference yesterday, as the market bought the pair on ECB’s more positive assessment of economic growth this year and the signals that an announcement on monetary policy awaits in October”.

“However, at the press conference Draghi made an effort to cap a further rise in EUR/USD by stressing the negative impact on the medium-term outlook for inflation from the stronger EUR”.

“Hence, while the price action today underscores our view that underlying EUR momentum remains strong, the market will keep in mind that ECB will likely not tolerate a further strong EUR appreciation in the short-term, which should put a soft cap on the pair ahead of the October meeting. We maintain our view, that any dip should be shallow and short-lived”.