EUR/USD: A buy on dips - Danske Bank

According to analysts from Danske Bank, the US dollar was further downside against the euro, that continues to make EUR/USD a buy on dips. 

Key Quotes: 

“The USD has depreciated sharply going into 2018 and three factors gave the dollar a further push lower this week: The announcement of protectionist measures by Trump, comments by the Treasury Secretary Steven Mnuchin saying that a ‘weaker dollar is good for us…’ and a perceived hawkish ECB on Thursday painting a bullish view on euro area growth.”

“While we disagree that a ‘weak dollar policy’ is something new, as this has been in place since Trump took over the Presidential seat, we do believe that USD has further downside versus EUR.”

“Both portfolio flows as well as current account flows are supportive of the EUR/USD. While we are closing in on fundamentally justified levels of EUR/USD (our valuation models suggest 1.29 for the cross), we stress that strong forces are driving the pair from both rising demand for euro assets through portfolio flows as well as balance of payments flows due to a continued current account surplus. It continues to make EUR/USD a buy on dips, in our view.”