EUR/USD cross is ripe for a further correction lower – Danske Bank

Chief Analyst, Allan von Mehren at Danske Bank, suggests that despite weak US releases, EUR/USD edged lower on Friday and in their view the cross is ripe for a further correction lower.

Key Quotes

“Positioning has again become somewhat stretched on EUR/USD longs and the latest ‘reflation hype’ has left notably the ECB looking overpriced. We think it is unlikely that we will see a shift in ECB rhetoric until Q2, and this week’s ECB minutes could serve as a reminder that nothing has changed materially for the ECB since December. Notably, the EUR support from an eventual reversal in debt flows has yet to be ignited, and we still expect the cross to see a dip within the 1.16-1.21 range near term.”