EUR/USD: the euro rally may be over, but drops represent a buying opportunity (Danske Bank)

Danske Bank believes that the EUR/USD could fall in the very short term on the forex and it offers long-term buying opportunities.

"The EUR/USD bounced back above 1.08 pushed by a combination of a "dovish" Fed rate hike, speculation on an ECB rate hike and French candidate François Fillon's victory in opinion polls.

The EUR/USD has not moved above 1.08 since the pre-US presidential period, and with the decline in the prospects for tax reforms in the US, we anticipate the formation of a floor.

In the very short term, however, the EUR/USD momentum seems to have ended in terms of rate moves, positioning and risk appetite. We therefore believe that opportunities to position oneself for a rise towards 1.14 (12-month forecast) will emerge."