The EUR/USD pair bounced on Friday amid signs of strength from the Federal Reserve and the European Central Bank (ECB), but ended the week below par. The Danske Bank economists expect the world’s most popular currency pair to extend its decline.
Those responsible for the ECB warn that a “sacrifice” is necessary
“The ECB appears to be following in the footsteps of the Fed. On Friday, Reuters reported that the ECB was to discuss a 75 basis point rate hike at its December meeting., while a story from Bloomberg sources over the weekend said the interest rate could be discussed by the end of the year. Also Schnabel, Holzmann, Kazaks and Knot showed a hawk posture.”
“Markets are focusing on discussing the coordinated tightening message from Jackson Hole as the ECB and Fed appear to have recommitted to creating price stability as yields soar and risk assets decline quite a bit from the last week. This contrasts with the recovery we have seen since June.”
“We continue to see EUR/USD continue to decline, with the goal of reaching about 0.95 in 12 monthsas dollar strength will likely pick up the pace in this environment.”
Source: Fx Street
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