All one way for EUR/USD? - Rabobank

"It is fairly easy to put together an argument suggesting that the fundamentals surrounding the USD have worsened over the past few months," note Rabo  |  11/01/2019 18:21

"It is fairly easy to put together an argument suggesting that the fundamentals surrounding the USD have worsened over the past few months," note Rabobank analysts and add: "The problem lies in the fact that the fundamentals of many of the other G10 currencies, including the EUR have also worsened."

Key quotes

"CFTC data demonstrate that going into the end of last year that the market was positioned long of USDs and short of EURs. Clearly this made the USD more vulnerable than the EUR to bad news. In the final weeks of last year there was a sharp turnaround in market expectations regarding the outlook for growth in the US economy and the likely reactions of the Fed. Market expectations of Fed tightening were dramatically pulled back and this has led to a wave of rebalancing of USD positions."

"How much further the USD will fall vs. the EUR depends heavily on how much the market wants to rebuild EUR positions. In 2019, the EUR is faced with several hurdles. In the first instance German economic data have soured. Following the release of weak German November industrial production data earlier this week, the market is debating the chances that Europe’s largest economy could have fallen into technical recession in H2 last year. Assuming the ECB does hike rates around September this year, the market is speculating that the impact would be offset by a
step up in TLTROs."

"For the EUR, the likelihood that the withdrawal of ECB policy stimulus this year is likely to be extremely cautious should temper upside potential. In addition, the prospect that the forthcoming European parliamentary elections will draw focus back to populism could weigh on the EUR into the spring. We thus see the potential for the recent recovery in EUR/USD to stall in the coming weeks and see scope for the currency pair to head back into its recent range."

Share

Popular News

Show More Popular News

Market Insight's Views

Market Insight analyses will provide both fundamental and technical comprehensions on FX
and other asset classes for Market Insight viewers

RISK WARNING

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC
        Back

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.

        register_ty

        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via info@marketinsight.com