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Forex pairs in this Article » EUR/USD (Barcelona) - Danske Bank Strategists note that USD gained support yesterday as better-than-expected US retail sales for December reduced concerns about the US recovery.

Key Quotes

“However, while JPY, CAD and AUD were sold off quite considerably, EUR/USD continued to edge higher supported by strong euro- zone industrial production data and consequently higher Eonia rates.”

“We still look for a lower EUR/USD in the medium to longer term and we have kept our 12M target unchanged at 1.26.”

“However, we stress that our outlook for a weaker EUR/USD in 2014 requires both the Fed and the ECB to take action: we still think there is potential for a steeper US money- market curve to push USD higher as the Fed ends tapering later in the year, and for the ECB to convince markets of its determination to anchor the short end of the EUR curve.”

“The latter is probably associated with the greatest uncertainty and today we could even see more upside to EUR/USD as we look for yet another upbeat European data release when the first estimate for German 2013 GDP is due at 09:00 CET.”

“Besides strong European data and higher Eonia rates, strong peripherals’ performance currently also provides support to the cross and therefore we have upped our near-term outlook a little and now see EUR/USD at 1.33 in 3M.”
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