#EURUSD @ 1.09075 seen moving lower to 1.02 in six-month horizon – Danske Bank
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The Fed raised its policy rate by 25 basis points (bps) to the range of 4.75-5%. EUR/USD jumped to 1.09 – the highest level since the beginning of February. However, economists at Danske Bank still expect the pair to move downward over the coming months.
“Fed hiked by 25 bps in line with our expectations but sent a dovish signal by emphasizing that Fed is ready to pause if credit conditions tighten markedly.”
“We stick to our call for a final 25 bps hike in May. We expect the Fed to maintain the policy rate at 5.00-5.25% through 2023.”
“We still see EUR/USD moving lower to 1.02 in 6M horizon. Relative rates have favoured EUR after the more hawkish ECB last week, but a prolonged rally in EUR/USD could support a renewed uptick in commodity prices and inflation expectations, and thus hinder a return to 2% inflation.”
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