DKK/USD Outlook: Likely to increase, supported by the higher rate compared to the recent average and its position near recent highs.
Key drivers:
• Rate gap: Danmarks Nationalbank's recent rate cuts are aligned with the European Central Bank, maintaining stability for the Danish Krone against the US Dollar.
• Risk/commodities: The USD has faced selling pressure, while the DKK has benefited from these dynamics, contributing to its strength.
• One macro factor: The upcoming core PCE price index may reveal persistent inflation, potentially retaining upward pressure on USD rates.
Range: DKK to USD is likely to hold steady near recent highs as it consolidates within its stable range.
What could change it:
• Upside risk: A stronger-than-expected PCE index could raise demand for USD, pushing DKK/USD lower.
• Downside risk: Renewed geopolitical tensions impacting the USD could lead to a sharp decrease in demand.