Welcome Guest:
Sign Up
Derived real-time data in partnership with:
Thomson Reuters
Jan 14 - 08:36 AM
EUR/USD - COMMENT-Bet The Slow EUR/USD Slide Is Maintained This Year
First appeared on eFXplus on Jan 14 - 06:50 AM

EUR/USD is likely to maintain its slow decline all year with rallies occurring whenever traders get too short.
However, the pair will constantly be weighed down by a big interest rate gap and a backdrop that suggests that gap will not close.
This year started with EUR/USD bouncing, largely because traders got shorter just as expectations for U.S. tightening collapsed at the end of last year when ECB also ceased buying bonds.
But net shorts remain small compared to prior betting.
There won't be a big squeeze.
With less or perhaps no tightening providing stimulus for a robust U.S. economy, while ECB policy crimps a cooling economy there's little chance rates will turn to favour a sustainable EUR/USD rise.
Currently investors can sell EUR/USD strength to bank an annual return around 3 percent.
With rates for much of FX still near zero and EUR/USD highly liquid and therefore a safer bet, that's a rate of return that seems folly to ignore.
The current range near 1.12-1.15 may edge down but longer-term a glacial slide, perhaps 1.10-1.13 at the end of the summer.

EUR shorts Click here

eurusd and 1 year forward swap Click here

Source:
Thomson Reuters IFR Markets

Subscription

  • eFXplus
  • End-user license agreement (EULA)

About

  • About
  • Contact Us

Legal

  • Terms of Service
  • Privacy Policy
  • Disclaimer
!