Daniel Brødsgaard, analyst at Danske Bank, notes that EUR/USD pair dropped yesterday as ECB finally acknowledged the market’s call for monetary easing.

“We see a case for the euphoria calming down again as the market recalls how it was left disappointed when ECB last announced rate cuts and QE in December 2015 and March 2016, i.e. we are not bound for a bigger move lower in EUR/USD after ECB’s dovish shift. Rather we see a case for EUR/USD to rebound today on a dovish Fed signalling it is ready to cut rates from July. In the end, we look for the Fed to ease more aggressively than the ECB and push EUR/USD higher. We forecast 1.15 in 3M.”