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Forex pairs in this Article » EUR/USD
FXStreet (Barcelona) - Anders Vestergård Fischer, Analyst at Danske Bank notes that USD has started to give in to the EM sell-off as well as to heightened expectations for an ECB cut on Thursday.

Key Quotes

“A February rate cut from the ECB in response to the latest downside inflation surprise would be a strong signal to the short end of the EUR money market curve (to which the euro remains highly sensitive) that the ECB is ready to react swiftly and may be moving closer to scrapping the aversion against negative rates (though we do not expect to see a negative deposit rate already this week).”

“Also, speculative positioning in itself suggests potential for a move lower in EUR/USD in the near term, see IMM positioning. We would thus not be surprised to see EUR/USD test the strong support level at 1.3390 on an ECB refi cut this week.”
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