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Jun 05 - 06:55 AM

EUR/USD - COMMENT-Forget Parity, EUR/USD Could Rise Much Further

By Jeremy Boulton  —  Jun 05 - 04:55 AM

EUR/USD, which has already risen 3 cents regardless of an interest rate differential that some thought would result in a parity test, could rise much further.

When traders had started to pare expectations for an expected cycle of interest rate cuts in the United States but maintained their view for a series of rate cuts in the eurozone, EUR/USD dropped while traders liquidated longs.

However, once traders were short - for the first time since September 2022 -EUR/USD started to rise.

Instead of the mooted parity test, EUR/USD has climbed steeply and traders have been swift to react, buying 9 billion euros, re-establishing their long favoured bullish positions, but the size of this wager is much smaller than it once was.
Without the restraint of that bigger wager, EUR/USD could rise swiftly.

The pair remains elevated ahead of Thursday's European Central Bank meeting and that is important as the bank is expected to kickstart the easing cycle.

The fact that EUR/USD can hold gains ahead of such a big - and logically bearish event - is a remarkably bullish situation.
Should lower oil prices - which suits the euro zone which imports - result in an earlier start for the U.S. easing cycle, then EUR/USD will get a boost, and probably a big one.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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