empty
19.05.2023 04:19 AM
The euro was left out of the game

It does not matter how far the European Central Bank is willing to go in raising rates. The main point is that the Federal Reserve does not intend to lower them. Danske Bank predicts that the ECB will raise borrowing costs three more times - in June, July and September - to 4%. However, this will not prevent EUR/USD from falling to 1.06. The company estimates the fair value of the euro at $0.9, which suggests huge potential for the major currency pair to fall within 1-3 years. This view contrasts with the Bloomberg experts' consensus estimate of 1.12 by the end of the year. However, for now, Danske Bank is basking in the spotlight.

The credit institution is betting on the nominal and real yield differential of US and German bonds. Even if the Fed stops and keeps the federal funds rate at a peak of 5.25% for a long time, the difference in debt yields will continue to stack up in favor of the United States. This will encourage capital flow from Europe to North America and further decline in EUR/USD. Danske Bank maintains its strategic case for a lower EUR/USD based on relative terms of trade, real rates and relative unit labour costs.

Be that as it may, expectations of a dovish pivot by the Fed were clearly overstated. Their current decline underlies the euro correction against the U.S. dollar. While before the April U.S. jobs report the odds of a monetary expansion in September were estimated at 90%, the figure has now fallen to 39%. However, in November the probability of a dovish pivot is 3 to 4. Its decline would allow EUR/USD to continue its correction.

Market Expectations for the Fed Funds Rate

This image is no longer relevant

Thus, the lagging cycle of monetary tightening by the ECB compared to the Fed is unlikely to help the euro. Will the economy be able to lend a hand to the regional currency? The EUR/USD rally from November to April was partly due to a change in views on the state of health of the world's leading countries. The strong US economy in 2022 was supposed to weaken under the influence of the Federal Reserve's most aggressive monetary restriction in decades. It hasn't.

On the contrary, faith in China's rapid recovery from the pandemic and the ability of the eurozone to avoid recession in the face of an energy crisis faithfully served the EUR/USD bulls until early May. Then everything changed. A series of disappointing reports on the currency bloc made investors doubt its stability. China is not growing as vigorously as the euro fans would like it to.

This image is no longer relevant

Alas, neither the divergence in monetary policy between the ECB and the Fed nor the differences in economic growth between the eurozone and the US are capable of providing the same support for EUR/USD as before. A correction under such conditions seems inevitable. The question is, how deep can the pair sink?

Technically, on the EUR/USD daily chart, you can find support near the pivot levels of 1.0755-1.0765. If they do not hold, the retracement will continue towards 1.071 and 1.066. We hold the previously formed shorts and and continue to build up.

Seleccione el marco de tiempo
5
min
15
min
30
min
1
hora
4
horas
1
día
1
s.
Gana con los cambios en el valor de las criptomonedas con InstaForex.
Descarga MetaTrader 4 y abre tu primera operación.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    UNIRSE AL CONCURSO

Recommended Stories

Análisis del par GBP/USD. El 22 de mayo. El mercado vuelve a responder sin ambigüedades a Trump.

El par de divisas GBP/USD continuó su movimiento hacia el norte el miércoles, aunque a primera vista no había razones claras para ello. Sí, el nivel de inflación (el único

Paolo Greco 07:12 2025-05-22 UTC+2

Análisis del par EUR/USD. El 22 de mayo. Un nuevo golpe al dólar: «One big beautiful bill act».

El par de divisas EUR/USD continuó su movimiento ascendente durante el miércoles. El dólar estadounidense lleva cayendo sin pausa por más de una semana, algo que no sucedía en todo

Paolo Greco 07:12 2025-05-22 UTC+2

El Bitcoin se convierte en víctima de estafadores

La confianza en el mundo financiero no solo puede perderla el dólar estadounidense. La información sobre el robo de datos de aproximadamente 197 mil clientes de Coinbase, la mayor plataforma

Marek Petkovich 14:05 2025-05-19 UTC+2

Análisis del par GBP/USD. El 19 de mayo. ¿Qué esperar de la inflación en EE. UU.?

El par de divisas GBP/USD continuó el viernes su movimiento lateral, que ya se observa desde hace un mes. En principio, en la ilustración del marco temporal de 4 horas

Paolo Greco 07:26 2025-05-19 UTC+2

Análisis del par EUR/USD. El 19 de mayo. La guerra comercial frena al dólar.

El par de divisas EUR/USD se negoció con caídas mínimas durante la jornada del viernes, con una volatilidad en general a la baja tras un «abril loco» La divisa estadounidense

Paolo Greco 07:26 2025-05-19 UTC+2

EUR/USD. En la trampa del rango lateral

El par euro-dólar sigue cotizando dentro de un rango estrecho, reaccionando de forma débil a acontecimientos fundamentales importantes. Por tercer día consecutivo, los compradores de EUR/USD intentan volver

Irina Manzenko 12:47 2025-05-16 UTC+2

Análisis del par GBP/USD. El 15 de mayo. El calvario del dólar continúa.

El par de divisas GBP/USD continuó su crecimiento el miércoles, que había comenzado el martes. Recordemos que el martes el mercado no tenía ninguna razón de peso para deshacerse masivamente

Paolo Greco 07:30 2025-05-15 UTC+2

Análisis del par EUR/USD. 15 de mayo. La fe del mercado en el dólar está por el suelo.

El par de divisas EUR/USD continuó su recuperación durante el miércoles en un contexto de calendario macroeconómico absolutamente vacío. Ni siquiera destacamos el único informe del día sobre la inflación

Paolo Greco 07:30 2025-05-15 UTC+2

Análisis del par GBP/USD. El 14 de mayo. Solo importa el tratado comercial.

El lunes, la moneda estadounidense se fortaleció considerablemente tras el éxito en la primera ronda de negociaciones entre EE. UU. y China, aunque, en esencia, ambas partes solo acordaron

Paolo Greco 07:22 2025-05-14 UTC+2

Análisis del par EUR/USD. El 14 de mayo. La música no duró mucho.

El par de divisas EUR/USD estuvo prácticamente todo el martes en una tendencia alcista. Uno se acostumbra rápido a lo bueno, y el mercado claramente esperaba una continuación del fortalecimiento

Paolo Greco 07:22 2025-05-14 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.