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Thomson Reuters
Jul 31 - 02:36 PM
EUR/USD - COMMENT-EUR/USD Gains Should Be Short Lived
First appeared on eFXplus on Jul 31 - 10:20 AM

EUR/USD got a lift as upside data beats in German retail sale and euro zone HICP tightened DE-U.S.
yield spreads a bit but the gains are likely to be fleeting.
Italy's GDP came in below forecasts and the IMF noted Greece's long-term debt outlook is uncertain nL1N1UR0AW nL5N1UR522.
Slowing Italian growth and potential Greek debt problems are likely to create economic and political instability in both countries, which should help keep euro trading on the heavy side.
Disparity in Fed and ECB interest rates will also temper bulls.
Fed hikes are still on course and the ECB is likely to begin lifting rates in the second half of 2019.
Short-term interest rate markets show that even when Fed hikes are halted while the ECB is tightening, the greenback will hold a significant yield advantage over the euro.
That advantage will make being short the dollar expensive.
That cost should help limit any EUR/USD upside.
The 1.1500/1.1850 range should remain intact.
Even if the pair should break above 1.1850 a move above 1.2000/1.2100 or to new long-term highs will be highly unlikely.

chart: Click here

Thomson Reuters IFR Markets


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