EUR/USD under some slight down pressure – Danske Bank

EUR/USD was under some slight down pressure yesterday, breaking below 1.24 as focus is centring on the continued rise in US 10Y yield, according to Analyst, Mathias Røn Mogensen at Danske Bank.

Key Quotes

“Today’s German inflation figures will set the scene for the euro figures tomorrow and remain key in determining the speed with which the ECB is able to move towards the exit. But, also watch out for Trump’s state of the union address today as this may include more on US trade measures. Notwithstanding, a new trading range has yet to be established for EUR/USD but the cross remains a buy on dips, in our view.”

“Expected repatriation of overseas earnings has put pressure on global USD funding conditions and e.g. kept the EURUSD OIS basis relatively wide to start the year. New US Treasury cash balance estimates published yesterday revealed that liquidity could keep the basis relatively wide over the medium term. The US Treasury expects the cash balance to be USD360bn at the end of Q2, which would lead to a tightening of USD liquidity.”