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Oct 26 - 02:55 PM

HSBC: Bearish and Short EUR/USD with Target at 1.0220

By eFXdata  —  Oct 26 - 01:33 PM


HSBC exhibits a pessimistic stance on EUR/USD, citing the challenging economic landscape in the Eurozone. The bank's preference for the USD against the EUR is driven by a dearth of compelling arguments to favor the EUR, other than its position as an alternative to the USD.

Key Points:

  1. USD Strength:

    • HSBC underscores its bullish outlook on the USD. The choice to pitch this optimism against the EUR is primarily because the bank finds limited reasons to be optimistic about the euro, except for its distinction as "not the dollar."
  2. Eurozone's Economic Challenges:

    • The foremost concern plaguing the EUR is the unfavorable blend of growth and inflation in the Eurozone. There's a persistent trend of disappointing activity data from the region, which stands out even more given the consistent downgrading of Eurozone growth expectations.
  3. Pessimistic Target:

    • Based on the cited concerns, HSBC is bearish on the EUR/USD pair, projecting a move towards 1.0220. HSBC runs a short position from 1.0576 with a target at 1.0220.

Conclusion: HSBC's perspective on the EUR/USD pairing leans heavily towards a stronger USD. The bank's skepticism about the euro's prospects stems from the continuous economic challenges in the Eurozone, notably the discouraging blend of growth and inflation figures. This bearish sentiment on the EUR underlines the broader uncertainties surrounding the Eurozone's economic recovery and the challenges policymakers might face in addressing them.

HSBC Research/Market Commentary


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