Checking out some of the responses to the rate cut in the US today.
- delivered a "hawkish" cut, easing by 25bp but not indicating that further cuts are planned.
- median dot in 2020 showing no change and hikes for 2021 and 2022
- Fed has softly signalled this may be the end of their easing
- Citi remain $ bulls
- FOMC … lack of commitment to more rate cuts this year
- We still look for more rate cuts from Fed, which should eventually support a higher EUR/USD
Danske forecast 1.10 for EUR/USD, 3 month horizon.
- the easing package, and in particular strong forward guidance, from ECB last week does add some counterweight to more Fed easing
- In the near-term, there is room for the pair to trade lower if Fed actively attempts to steer the market away from expecting more rate cuts, but also for the pair to move higher if data weakens and the market starts to price more Fed cuts again."