#EURUSD @ 1.09979 : Still seen lower at 1.07 in the next months – Danske Bank
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The Federal Reserve raised the policy rate by 25 basis points to the range of 4.5-4.75% as expected. The US Dollar came under heavy selling pressure but economists at Danske Bank still expect a lower EUR/USD as the base case remains for Fed to hike rates to 5% by May.
“Fed hiked rates by 25 bps as widely expected. Powell saw probability of soft landing increasing, as inflation has eased without the economy slowing markedly. “
“The persistently tight labour and the turnaround in global manufacturing cycle leave Fed little room to turn more dovish. We still expect 2×25 bps hikes in the March and May meetings.”
“Markets reacted dovishly, with USD selling off and UST yields falling. We stick to our forecast of lower EUR/USD at 1.07 in 3M.”
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