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5 Mar 2013
Forex Flash: EUR support could fade away ahead of ECB – Danske Bank
The single currency is back to levels seen overnight, where risk appetite pushed the cross above 1.3050, although the euro would remain under pressure as we get closer to the ECB meeting.
According to M.Helt, Senior Analyst at Danske Bank, the uncertainties emanating from Italy would contribute to the unstable EUR entourage “and if euro area data does not show signs of improvement in the coming months it could trigger an ECB refi rate cut in April or May. A refi rate cut will make it more attractive for banks to keep liquidity and front-end of the euro money market curve should flatten and thus more downward pressure on EUR/USD could be seen from a relative rate point of view”
According to M.Helt, Senior Analyst at Danske Bank, the uncertainties emanating from Italy would contribute to the unstable EUR entourage “and if euro area data does not show signs of improvement in the coming months it could trigger an ECB refi rate cut in April or May. A refi rate cut will make it more attractive for banks to keep liquidity and front-end of the euro money market curve should flatten and thus more downward pressure on EUR/USD could be seen from a relative rate point of view”