24 Mar 2015
EUR/USD might target 1.04 over 12M view - Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, notes that the pace at which Germany reflates may have an impact on the length of ECB’s purchases, which might alter the longer-term projections for EUR/USD.
Key Quotes
“We have previous argued that the ECB’s huge bond buying programme has been the overwhelming influence on the German interest rate curve. Bunds yields have been driven lower in the face of a string of better than expected economic data releases.”
“That said, the pace at which Germany reflates may have implications as to market expectations regarding the length of time that the ECB pursues the QE programme and this may alter longer-term projections for the value of EUR/USD."
“Even though our house call that the Fed could delay an interest rate rise until the end of the year is more dovish that the market median, it is still the case that we are expecting a tightening in Fed policy to come at a time when the ECB is still hovering up assets as part of its bond buying programme."
“Consequently we continue to expect EUR/USD to trend lower this year.”
“Last week’s Fed statement, however, has served as a braking force in the pace of the downtrend and parity in EUR/USD now seems much further away than it did just a week ago.”
“Our 12 mth EUR/USD target stands at 1.04.”
Key Quotes
“We have previous argued that the ECB’s huge bond buying programme has been the overwhelming influence on the German interest rate curve. Bunds yields have been driven lower in the face of a string of better than expected economic data releases.”
“That said, the pace at which Germany reflates may have implications as to market expectations regarding the length of time that the ECB pursues the QE programme and this may alter longer-term projections for the value of EUR/USD."
“Even though our house call that the Fed could delay an interest rate rise until the end of the year is more dovish that the market median, it is still the case that we are expecting a tightening in Fed policy to come at a time when the ECB is still hovering up assets as part of its bond buying programme."
“Consequently we continue to expect EUR/USD to trend lower this year.”
“Last week’s Fed statement, however, has served as a braking force in the pace of the downtrend and parity in EUR/USD now seems much further away than it did just a week ago.”
“Our 12 mth EUR/USD target stands at 1.04.”