EUR/USD: ECB meeting to have limited market impact – Danske Bank

EUR/USD has risen sharply this week, breaking well above 1.07 for the first time since the US election, with EUR optimism continuing in yesterday's session. This move has been fuelled by what appears to be a regime shift in euro area - particularly German - fiscal policy, with large-scale investments in infrastructure and, most notably, defence spending , Danske Bank's FX analyst Kirstine Kundby-Nielsen reports.

Further momentum to the EUR/USD rally

"We believe that the combination of factors from both Europe and the US points to further near-term upside risk for EUR/USD, especially if US data continues to disappoint."

"Yesterday's ADP jobs report and ISM services data somewhat diverged, with the former printing on the weak side, while the latter surprised to the upside, showing broad-based strength across the subindexes. Today, the focus shifts to the ECB meeting, though we expect limited market impact."

"Looking ahead, markets will be closely watching tomorrow's US February jobs report, where we anticipate a downside surprise, forecasting a payrolls print of 120k versus the consensus estimate of 160k. If realized, this could add further momentum to the EUR/USD rally."