EUR/DKK: A bounce bank relies on the ECB – Danske Bank

EUR/DKK dropped to 7.4700 yesterday without any clear factor to explain it, in the opinion of analysts at Danske Bank. If the European Central Bank (ECB) stays on hold next week it could favour the pair. 

Key quotes

“Weak equity markets, higher USD/DKK, seasonal dividend flows, and a still large discount in FX forwards all support the pair.”

“We think this reflects that the market is cautious staying long EUR/DKK on this side of the ECB with the possibility of a narrowing of the policy rate spread.”

“We would expect to see EUR/DKK bounce back, if ECB stays on hold next week.”