EUR/USD a ‘buy on dips’ looks attractive – Danske Bank

In opinion of Senior Analyst at Danske Bank Jens Pedersen, dips in spot are seen as buying opportunities.

Key Quotes

“The USD rally continued yesterday, driven by rising expectations that the Fed might hike interest rates in March and a general positive tone on equity markets”.

“Market is currently pricing in an implied probability of a March hike of just below 70%. We still think a rate hike in May or June is the most likely scenario, and while we still see EUR/USD grinding lower in coming months, targeting 1.05 in 3M, the two key drivers for a lower EUR/USD near term (US tax policy and FOMC reprising) look increasingly exhausted as it still might take some time before the Trump administration presents its tax and spending plans”.

“Hence, from a risk/reward perspective, buying EUR/USD on dips for a temporary correction higher looks increasingly attractive”.