EUR/USD could intensify its decline – Danske Bank

FXStreet (Edinburgh) – Jens Pedersen, Senior Analyst at Danske Bank, noted that Greek events could accelerate the drop of EUR/USD in the upcoming weeks.

Key Quotes

“The initial flight-to-quality response will soon be dominated by expected monetary policy responses. The market will speculate that the ECB will stand ready to add more QE, if the Greek situation escalates”.

“This would be crucial for EUR-crosses, which will fall broadly, and EUR/USD could test the late-May low around 1.08, even as expectations for a Fed rate hike are pushed back”.

“Notably, the latter will likely limit the fall in the cross as FOMC has clearly stated its reluctance to start hiking at a time of elevated European uncertainty”.

“The same reasoning applies to Bank of England and GBP”.

EUR/USD has returned to the 1.10 area following the Greek events over the weekend…

(Market News Provided by FXstreet)