EUR: Just neutral – Handelsbanken

Recently, there has been a link between the EUR/SEK and the dollar. After the Fed’s rate cut which could be followed by other central banks, strategists at Handelsbanken maintain a neutral position for the euro.

Key quotes

“When the dollar has strengthened, the krona has weakened versus the euro, and vice versa. In recent weeks, the dollar has depreciated sharply against both the krona and the euro, which may have helped to strengthen the krona.”

“The weakness of the dollar may partly be due to the fact that short EUR/USD has been a popular strategy for those wishing to bet on the interest rate spread between the currencies. Now that the new coronavirus is spreading outside China, these positions have been closed, which has resulted in an inflow to the euro.”

“Following the Fed’s rate cut at its extra meeting, the expectations of stimulus measures by other central banks have increased. Forecast at present: neutral.”