EUR/DKK Outlook:
The outlook for EUR/DKK is likely to move sideways as it trades near its recent average and within a stable range.
Key drivers:
- Rate gap: The Danish National Bank has lowered interest rates to align with the European Central Bank's policy, reflecting a similar monetary environment for both currencies.
- Risk/commodities: Oil prices are significantly above their recent average, which can affect the Eurozone economy due to increased energy costs, thereby impacting EUR performance.
- Macro factor: The recent drop in Eurozone inflation to below target has raised uncertainty around future ECB rate decisions, influencing the euro's strength.
Range:
EUR/DKK is expected to hold within its recent narrow range, showing little volatility due to balanced factors affecting both currencies.
What could change it:
- Upside risk: A stronger-than-expected ECB shift in tone towards rate hikes could support the euro.
- Downside risk: Continued weakening of German economic data could pressure the euro lower against the krone.