From a strategical perspective, we think the current move has legs to run, but from a tactical perspective, we think caution is warranted considering the market has moved much closer to our forecast in a very short time. Our forecast remains that the Fed will cut its policy rate to 4.25% and that the ECB will cut its policy rate to 2.25 and that EUR/USD will move down toward 1.03. We remain confident that the Fed will cut less than the market anticipates, but see an increasing risks that the ECB could cut more than we think. Downside risks to the ECB and the potential for fiscal stimulus and tarifs from Trump means that we see an increasing risks that EUR/USD will fall below parity and below our 1.03 forecast. - Nordea
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