EUR/USD now looks to US debt ceiling – Danske Bank
Senior Analyst at Danske Bank Jens Pedersen assessed the prospects for the pair in light of the key US debt ceiling issue.
“In the market for EUR/USD, the outlook for the EURUSD CCS next year will to a great extent depend on what happens after the current suspension of the US debt ceiling expires on Friday”.
“We are most likely headed for another period of a binding debt ceiling before a solution is found in February-March next year when extraordinary measures run out, in our view”.
“That in turn will contribute to keep the US treasury cash balance low and USD liquidity easy and limit a further widening of the EURUSD CCS in coming months. However, we also note that back in September the 3M suspension surprised the market”.