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EURUSD – 1.16 by end of Q2 & 1.14 by year-end – BarclaysBarclays discussed its outlook for USD in a recent note to clients, maintaining a bullish bias and targeting EURUSD at 1.16 by the end of Q2 and 1.14 by year-end. Barclays explains: The USD remains king of the beasts… The dollar offers the best of both worlds: G10-leading growth that bests all but a handful of EM, and a recent track record as the best-performing safe haven. On its eponymous smile, it seems to simultaneous reside at both ends at once, like Schrodingers cat in two simultaneous states, as markets bounce between radical post-COVID uncertainty and ebullience on surging US data. Amid a bond market selloff that challenges the relative safety of duration, this gives the USD an attraction in global portfolios that is unmatched as a hedge on equity risk. Yet, after years of appreciation, the USD remains overvalued, although down from last year’s risk-driven surge. Hence, we expect the dollar’s Schrodinger’s cat grin to keep it buoyant at elevated levels, but not lead to significant appreciation.
by thunderpips
PMI beats have helped the Euro retain hold of the 1.1800 handle.PMI beats have helped the Euro retain hold of the 1.1800 handle against the Buck. Possible movements down into 1.17090 are now likely,. The Dollar remains upwardly mobile amidst deteriorating risk sentiment on latest waves of the coronavirus that are forcing many countries to roll-back reopening plans and some to re-enter lockdown or tighten restrictions. However, the DXY has encountered some resistance in chart terms beyond 92.500 and its prior 2021 peak around the 200 DMA (92.604) alongside resilience in the Euro and Pound belatedly following significantly better than expected preliminary PMIs from France, Germany, the bloc as a whole and UK even though the EZ readings could all be downgraded in the final reckoning given fresh pandemic outbreaks since the cut-off point for compiling the flash surveys. Hence, the index has drifted down from best levels within a 92.608-338 band awaiting US durable goods data and Markit’s initial March PMIs before another bunch of Fed speakers and a double helping of supply.
Short
by FTUKcom
8
EUR: Current Sentiment DriversLatest Developments: March 22 – Spain’s coronavirus cases increased to 3,228,803 (+4,420) while Italian cases increased to 3,400,851 (+13,820) and French cases increased to 4,298,395 (+15,792). March 17 – Final HICP for February remained unchanged from January at 0.9% Y/Y; although, Core HICP was confirmed at 1.1%, compared to January’s 1.4%. March 11 – At their March meeting, the ECB kept all three key rated unchanged as expected, and although the size of PEPP and APP remain unchanged, the ECB stated that purchases under PEPP in the next quarter are to be conducted at a significantly higher pace. March 9 – Revised GDP for Q4 printed at -0.7% Q/Q and -4.9% Y/Y compared to -0.6% Q/Q and -5.0% Y/Y for the flash estimates. February 1 – Europe’s Unemployment Rate for December remained unchanged at 8.3%. Future Sentiments Shifts: EUR’s outlook remains highly dependant on the coronavirus outbreak and Europe’s economic outlook. Concerns over Europe’s coronavirus outlook have risen since late last year, with many countries now suffering second waves and re implementing lockdowns. Although countries appear better equipped compared to their initial outbreaks, Europe’s coronavirus outlook poses significant downside risks to their economies. Additionally, although the EU is rolling out a vaccine programme, it has faced several obstacles and widespread criticism. All in all, while coronavirus concerns remain high in Europe, risks for EUR will be to the downside, especially when compared to the currencies of countries that are managing their outbreaks and vaccine rollouts more effectively. Primary Drivers: European Central Bank – Europe’s monetary policy outlook remains key to EUR’s fundamental outlook. EUR is likely to be supported when the ECB holds a hawkish stance and begin tightening policy, but come under pressure when the central bank holds a dovish stance and is expected to ease policy. Month End Flows – During the last few trading days of every month, EUR is usually influenced by month end flows as banks and institutions rebalance their books and settle transactions. Although not always the case, more often than not, month end flows tend to be EUR positive especially against GBP. USD –EURUSD is the most traded currency pair in the world, making up 24% of daily forex trades according to the Bank of International Settlements (BIS). As such, movements in USD often influence EUR, with EUR weakening when USD strengthens and EUR strengthening when USD weakens.
by thunderpips
2
Under pressure again and top heavy vs the Dollar above 1.1900...Not the weakest G10 link by any means, but under pressure again and top heavy vs the Dollar above 1.1900 where 1.7 bn option expiries reside ahead of the Fed. However, the single currency has lurched some distance away from 1.2 bn at the 0.8600 strike against Sterling after stops at 0.8550 were finally tripped to push the cross down to test 2021 lows circa 0.8540 and underlying bids arrested a deeper retreat to expose the round number below. Overall a possible short-lived bull spike may occur over the remains trading days for the week if the highlighted trendline on the 1-Hour can break. Hence, the Pound is being propped indirectly and gleaning sufficient support to stay within sight of the 1.3900 handle vs the Buck even though the DXY bounced towards 92.000 before fading again in the run up to the FOMC.
by FTUKcom
5
EURUSD: Price Action & Trading Opportunity for Next Week Hey traders, EURUSD is ahead of a strong daily/4h resistance cluster. We already saw a positive bearish reaction from that this week and it looks like the market is preparing for one more test of that. To short the market wisely, wait for a bearish breakout of a support line of a bullish flag pattern on 4H. It will be a nice confirmation . Remember, in case if the price goes above the red zone, setup will be invalid. Please, support my analysis with like! Have a great weekend!
Short
by VasilyTrader
18
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