30 Jul 2015
EUR/USD: waiting for a breakdown of the range – Westpac
FXStreet (Edinburgh) - In the view of Richard Franulovich, Strategist at Westpac, the current range in the pair could be broken to the downside.
Key Quotes
“EUR/USD’s three month 1.08-1.14 range looks like extending for a while yet, the region’s healthy basic balance (driven mainly by trade surpluses rather than capital flows) containing what should otherwise be a healthy persistent depreciation driven by negative short term interest rates and ongoing ECB QE”.
“Even so, the medium term risks remain skewed lower. The renewed slump in commodity prices and the region’s still large output gap point to ongoing fragility in
inflation expectations and by implication high risks of ECB QE for longer”.
“The 1.08-1.14 range should thus eventually break to the downside”.
Key Quotes
“EUR/USD’s three month 1.08-1.14 range looks like extending for a while yet, the region’s healthy basic balance (driven mainly by trade surpluses rather than capital flows) containing what should otherwise be a healthy persistent depreciation driven by negative short term interest rates and ongoing ECB QE”.
“Even so, the medium term risks remain skewed lower. The renewed slump in commodity prices and the region’s still large output gap point to ongoing fragility in
inflation expectations and by implication high risks of ECB QE for longer”.
“The 1.08-1.14 range should thus eventually break to the downside”.