25 Aug 2015
EUR/USD correction higher overdone? – Rabobank
FXStreet (Edinburgh) - According to Jane Foley, Senior Currency Strategist at Rabobank, the current upside in the pair could be running out of steam.
Key Quotes
“The Jackson Hole conference this weekend will give central banker the opportunity to present their reactions to recent events in global markets”.
“As its stands only two major central banks have been preparing the markets for an interest rate hike, the Fed and the BoE”.
“Both have been providing guidance that even when lift off in rates does occur that monetary policy will remain accommodative”.
“In all likelihood recent events will ensure this message is underpinned. That said, the recent weakening in the value of the USD implies that monetary conditions in the US have eased tangibly over the past week or so while those in the Eurozone have tightened”.
“The ECB is thus likely to ensure a dovish message is communicated to the market in the coming weeks. This may help limit scope for further aggressive covering of EUR shorts”.
“It will clearly take a while for the dust to settle over markets following the recent bloodbath, but we now see the EUR as less vulnerable to aggressive position adjustment. For the brave investor it could be time to dabble again with a EUR/USD short”.
Key Quotes
“The Jackson Hole conference this weekend will give central banker the opportunity to present their reactions to recent events in global markets”.
“As its stands only two major central banks have been preparing the markets for an interest rate hike, the Fed and the BoE”.
“Both have been providing guidance that even when lift off in rates does occur that monetary policy will remain accommodative”.
“In all likelihood recent events will ensure this message is underpinned. That said, the recent weakening in the value of the USD implies that monetary conditions in the US have eased tangibly over the past week or so while those in the Eurozone have tightened”.
“The ECB is thus likely to ensure a dovish message is communicated to the market in the coming weeks. This may help limit scope for further aggressive covering of EUR shorts”.
“It will clearly take a while for the dust to settle over markets following the recent bloodbath, but we now see the EUR as less vulnerable to aggressive position adjustment. For the brave investor it could be time to dabble again with a EUR/USD short”.