EUR/USD: 3-month target at 1.15 thanks to Fed (Danske Bank)

According to Jens Nærvig Pedersen, senior analyst at Danske Bank, the EUR/USD pair was confronted on Tuesday with a price reality test when Bullard of the Fed argued that a 50-basis point drop would be exaggerated and Powell also did not commit to lower rates.

"Comments from both Fed members caused the EUR/USD to temporarily fall due to the rise in US rates. There is still time left before the 31 July FOMC meeting and other upcoming data and speeches, which means that the market will likely continue to be uncertain as to whether or not to anticipate a 50-basis point rate cut for the July meeting.

The EUR/USD should remain close to 1.14 in the short term before rising to 1.15 within 3 months as the Fed begins to lower its rates.

In addition, as far as market positioning is concerned, there is still room for more short positions to be reversed on the EUR/USD. Technically, the market will keep an eye on the 30 March peak at 1.1448."