The European Central Bank, as expected, rose the key interest rates by 50 basis points on Thursday. Analysts at Danske Bank see another 50bp hike in March and a 25bp in May. They consider that medium-term drivers indicate that the EUR/USD pair is overvalued.
Markets conclude ECB is close to being done
“Markets took the ECB’s communication as a sign that the ECB is close to ending its hiking cycle, as bond yields rallied strongly. We judge that today’s communication reflects a very split governing council. We still expect the ECB to hike its policy rates by 50bp in March and 25bp in May.”
“In recent weeks, EUR/USD has defied the shift and sudden underperformance of Eurozone equities, which we otherwise deem to have been an important driver behind the EUR/USD rally since September (Eurozone equities overperforming during this period). Our tactical conviction on EUR/USD is not high, but we maintain a clear sell-on-rallies bias for the cross as we still think medium-term drivers indicate that EUR/USD is overvalued (and not undervalued).”
- SEO Powered Content & PR Distribution. Get Amplified Today.
- Platoblockchain. Web3 Metaverse Intelligence. Knowledge Amplified. Access Here.
- Source: https://www.fxstreet.com/news/eur-usd-maintaining-a-clear-sell-on-rallies-bias-danske-bank-202302021632
- a
- Analysts
- and
- Another
- Bank
- basis
- behind
- being
- bias
- bond
- Bond yields
- central
- Central Bank
- clear
- Close
- Communication
- conclude
- Consider
- conviction
- Council
- Cross
- driver
- drivers
- during
- ECB
- Equities
- EUR/USD
- European
- European Central Bank
- Eurozone
- expect
- expected
- High
- Hike
- hiking
- HTTPS
- important
- in
- indicate
- interest
- Interest Rates
- judge
- Key
- maintain
- March
- otherwise
- period
- plato
- Plato Data Intelligence
- PlatoData
- points
- policy
- rally
- Rates
- recent
- reflects
- ROSE
- September
- shift
- sign
- since
- split
- Still
- strongly
- sudden
- tactical
- The
- to
- today’s
- Weeks
- which
- yields
- zephyrnet