EUR/DKK Outlook:
Slightly positive, but likely to move sideways as the rate is near its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank is maintaining interest rates at 2%, while Danmarks Nationalbank has reduced its rate to 1.85% to support the krone’s peg to the euro.
• Risk/commodities: Oil prices are currently elevated and volatile, which can influence inflation and economic stability in the Eurozone and Denmark.
• One macro factor: Eurozone inflation dropped to 1.7% in January, below the ECB's target, raising concerns about potential future interest rate cuts, impacting the euro's performance.
Range:
Expect the EUR/DKK to hold steady within its recent 3-month range.
What could change it:
• Upside risk: An unexpected shift in the ECB's policy due to strong economic data could bolster the euro.
• Downside risk: Continued pressure on the krone's peg amid concerns about its stability could weaken the Danish currency against the euro.