Get started

Euro-dollar

EURUSD Tipped To Weaken To At Least 1.175 Say NordeaForeign exchange analysts at Nordea notes the strength in recent US data releases and the upgrading of consensus forecasts surrounding US growth. The bank expects that strong growth, especially in relation to the Euro-zone will lead to further Euro-to-Dollar exchange rate selling in the short term. It expects that EUR/USD will weaken to at least 1.1750 and potentially further. Strong US growth expectation will boost the US Dollar (USD) The bank notes that recent US data releases have been stronger than expected and there was a much stronger than expected jobs report on Friday with an increase in non-farm payrolls of 379,000 compared with consensus forecasts of an increase close to 200,000. “Consensus economists seem to be competing among themselves to hike their US growth forecasts following: i) fiscal divergence, ii) vaccine roll-out divergence and iii) a more benign financial impulse from currency weakness in 2020. We wouldn’t fight this trend.” Short-term growth expectations will inevitably be boosted by Senate approval of the $1.9trn support package. There will inevitably be a positive impact on consumer spending given cash payments to individuals. The US economy is now expected to perform much more strongly that the Euro-zone and history suggests this will strengthen the dollar. Bond yields liable to increase further In contrast from their expectations last month, the bank is now less confident that the huge increase in liquidity resulting from the drawdown in the Treasury’s cash balance will weaken the US dollar. Expectations of stronger growth will tend to increase the threat of bond selling. Nordea notes that, in comments last week, Fed Chair Powell declined to push back against the increase in bond yields. The bank is concerned over the threat of further cash selling of Treasuries which would put further upward pressure on yields. If higher yields trigger a slide in equities, the dollar could also gain defensive support.
by thunderpips
3
ING's exchange rate projections - EUR/USD rate forecast at 1.300Foreign exchange analysts at ING considers that stresses in the bond market could continue in the short term and contribute to a further dollar correction stronger . Nevertheless, it expects inflation fears will subside which will allow yields to stabilise. In this environment, the bank expects that the dollar will weaken again as the Fed maintains a very accommodative monetary stance. The bank has a 12-month Euro-to-Dollar (EUR/USD) exchange rate forecast of 1.3000. US Dollar (USD) exchange rate losses to resume, Fed to stay very accommodative ING notes the importance of US bond markets and increase in yields for short-term currency moves. The sharp increase in yields has triggered dollar gains and a dip in commodity currencies while the Swiss franc and Japanese yen have weakened. This threat could continue in the short term; “With the Fed yet to express concern over the bond sell-off, US Treasuries could stay under pressure into the March 17th Fed meeting. EUR/USD could briefly correct to 1.17 mid-month.” Nevertheless, ING does not consider that there will be permanent inflation threat and expects that yields will stabilise which will allow pro-cyclical currencies to strengthen again. In short this means we regard the current dollar rally as a bear market bounce and remain fully invested in a 2Q story of a broadening global recovery, which should lift all currencies – including the EUR. ING expects that the Euro-zone vaccine programme will eventually get into gear which will help underpin the Euro. The bank maintains a 12-month EUR/USD forecast of 1.3000 as the dollar loses ground and the Euro posts net gains.
by thunderpips
3
Euro getting ready for explosive upmoveThe Euro broke the long term down trend some time ago. It consolidated and is now ready to move upwards way beyond 1.23. The whole move in the USD will probably be as in past cycles. If we look at long term moves the Euro moved down from 1.60 to lows of around 1.04. Past upcycles based on the old DM charts were generally almost a doubling or halving depending which way you are looking at the currency moves. The move from start of the 2000s was basically a doubling. The move now can carry through for about 3 years to somewhere between 1.80 and 2. This should be played using the intraday moves for trades. My view is to trade within your primary trend but maintain a core long position using forwards in order to keep interest costs low.
Long
by thewickedwiz
2