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Aug 09 - 02:36 PM
EUR/USD - COMMENT-Trump, EUR/USD And The Sword Of Damocles
First appeared on eFXplus on Aug 09 - 12:25 PM

Expectations of ECB easing might soften the euro, but Trump's Twitter campaign against the Fed for lower rates and a weaker dollar nL4N2543ZO will limit the hindrance to the euro .
Another key factor mitigating any EUR/USD weakness would be the ECB's own policy constraints, analysts at Commerzbank said in a note. "The ECB is slowly approaching the feasible limit of its QE tools," Commerzbank said. "It cannot stretch the issue limits endlessly - unless it wants to assume legal risks after all." Commerzbank said in the note that it lowered its EUR/USD forecast for late September to 1.10 from 1.14. "The fact that we are not predicting more pronounced QE effects is also down to the US President," Commerzbank added.
EUR/USD has been holding up well, fighting off concerns about Italian political risks recently .
The euro's resilience may also be helped by persistent speculation over what, if anything, might lead the Trump down the road of FX intervention .
While it doesn't appear to be markets' base-case scenario, the subject has pushed its way into the FX debate.
As Commerzbank said: "...the sword of Damocles of interventions is hanging over the dollar."

EUR/USD: Click here

(Burton Frierson)

Refinitiv IFR Research/Market Commentary


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