USD Expected to Gather Traction in the Next Months – Danske Bank
Analyst at Danske Bank Mathias Mogensen sees the dollar edging higher in the upcoming months.
“The ECB delivered no surprises on Thursday, which meant relatively limited action in EUR/USD: Draghi did keep the door open for additional rate cuts but signalled the ECB still prefers other instruments (such as QE) over rates and thus echoed the March closure of the currency war”.
“This essentially leaves the euro area free not to worry about rate cuts for now”.
“Focus now turns to the Fed meeting on Wednesday; we expect rates unchanged but emphasise the potential for another round of EUR/USD downside as speculators are now on the whole broadly square the greenback according to CFTC data and hence the potential for relative rates (which we see moving in favour of the USD ahead of a September hike) to play a role again for a while has returned”.