Too early for EUR/USD to make the next level shift higher – Danske Bank

EUR/USD saw a significant jump yesterday on the hawkish headlines from the ECB minutes suggesting a shift in communication earlier than previously anticipated, according to Senior Analyst, Jens Nærvig Pedersen at Danske Bank.

Key Quotes

“We do not buy into the ‘reflation’ story and hence still deem it too early for EUR/USD to make the next level shift higher. For this to happen in Q1 would require a cyclical outperformance of the eurozone versus the US and/or upside wage/inflation surprises with neither being our base case. Today, watch out for US CPI: the monthly uptick that we look for should keep Fed March hike expectations alive and halt the EUR/USD uptick.”