The euro fell to its lowest level against the dollar so far in 2024 as bond markets reassessed interest-rate cut pricing, driving Treasury yields higher, Danske Bank Research said.
“EUR/USD faced renewed pressure as markets reassessed the aggressive pricing of rate cuts.”
Danske Bank Research maintained its strategic case for a lower EUR/USD, and in the near term, prefering to sell on any rallies.
The euro repeatedly failed to sustain a break above $1.10 throughout 2023 and is shy of this level so far in 2024, but BNP Paribas Markets 360 believes it has the potential to rise in the longer term.
“Going forward, we think it’s more likely than not that this barrier [1.10] is broken through and we forecast EUR/USD to close the year at 1.15.”
Sterling rebounded after data showed U.K. annual CPI inflation unexpectedly rose to 4.0% , dulling chances of an early interest-rate cut.
The data prompted some to slash bets on the currency falling below $1.26 against the dollar, Swissquote Bank said.
The U.K.’s anemic growth should limit gains in sterling against the U.S. dollar, Swissquote added.