Geopolitics expected to drive sentiment around EUR/USD – Danske Bank

Analyst at Danske Bank Aila Mihr noted the relevance of the geopolitical scenario as main dirver for the FX space ahead in the week.

Key Quotes

“In a week which calendar-wise brings little in terms of G4 data releases (UK and Japanese CPI aside), focus will likely be on the Russia/Syrian issue. It still appears from our short-term models that EUR/USD on net benefits from a rise in uncertainty as measured by VIX vol; note also that oil prices could rise further if the Russia-Syrian issue escalates further”.

“That said, we note that positioning is now very stretched on EUR/USD longs (back at 2013 highs), making the cross vulnerable if USD starts to exhibit safe-haven properties again”.