Danske recommends to sell EUR/USD.

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Danske analysts suggested to sell EUR/USD as they believe that the rate will drop in near term, driven by these three facts: “(1) positioning is now much cleaner than earlier in the year, (2) we believe that the market is too negative about the US economy, (3) we believe that Brexit risks will weigh on EUR/USD up to the referendum on 23 June” said Danske.

“We target EUR/USD to fall to 1.09 over 3M in case of a Brexit. − The ECB would be likely to use QE rather than rates, which would dampen the EUR negative impact, in our view. Longer term, EUR/USD will head higher on valuations, but near term we recommend to be positioned for a lower EUR/USD” written in the report.

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