EUR/USD: A more hawkish Fed and a overdone reaction to ECB – MUFG

Analysts at MUFG Bank are recommending a alternate thinking of shorting the EUR/USD pair with a goal at 1.1300, an entry degree of 1.1650 and a cease at 1.1850. They think about the EUR/USD may want to combat to construct on Thursday’s gains.

Key Quotes:
“The EUR bounced the previous day on a experience that ECB President Lagarde used to be much less than enthusiastic in pushing lower back contemporary market pricing for price hikes subsequent year. But senior central bankers hardly ever remark on unique market pricing and for this reason we did no longer view Lagarde as moving the ECB stance in any way. We are in a market the place buyers are more and more questioning the ahead coaching of central banks – however we would argue that the ECB is on greater credible floor than some of the different central banks and consequently a sustained divergence favouring a weaker EUR is probably to persist going forward.”

“The focal point subsequent week will shift of route to the FOMC and whilst we do now not get any formal up to date practise on rates, we will get the QE tapering plan, the assertion and the press convention and it is probable that Fed Chair will discuss more challenging on inflation given tendencies of late. We don’t assume any massive shift in tone or message however sufficient to instant some reversal of the heavy USD promoting in proof in October.”

“Technically, EUR/USD is at an fascinating factor as well. The downtrend resistance on the every day intra-day chart from the highs in June and once more in September comes in a little above the present day spot price (1.1706 today) and that may want to act to restrict the upside over the short-term.”

 

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