18 Sep 2013
EUR/USD bounces higher but 1.3400 in play
FXstreet.com (Athens)- The EUR/USD is still hovering around 1.3350 but unable to trade higher despite US house data let down investors.
EUR/USD capped by 1.3350 but might be ready to rally if “lite-tapering” comes out
The EUR/USD is congested in a very narrow range ahead of FOMC minutes and post dismal US housing data. The crucial point to consider of is that the pair shows that has the momentum to trade higher, in case the FOMC does not fully deliver in expectations. Taken for granted that the labor market is stumbling, while recent softer inflation data has stoked concerns about broader economic weakness, and the earlier dismal US housing data released, investors should bear in mind that is more than probable that the FOMC will play a more dovish scenario. This can be done in many ways, one of them is through a dovish tapering in QE in addition with a shift in the Fed’s forward guidance thresholds.
Technical Outlook and Strategic Bias on EUR/USD
Generally speaking a dovish FOMC played scenario i.e. light tapering with some additional forward guidance will hurt the greenback and vice-versa. Marc Chandler Global Head of Currency Strategy, on behalf of BBH Currency Strategy Team suggests that “We have argued that if the Fed does taper, it is not because the economy is overheating. Nominal growth during this recovery has been, and continues to be, weak compared with other recovery periods….Expectations of the size of the tapering have themselves been tapered. The consensus appears to be for $15 bln (split between $10 bln less Treasuries and $5 bln less MBS). We hasten to add that it is not just monetary policy that is becoming less stimulative.”
EUR/USD capped by 1.3350 but might be ready to rally if “lite-tapering” comes out
The EUR/USD is congested in a very narrow range ahead of FOMC minutes and post dismal US housing data. The crucial point to consider of is that the pair shows that has the momentum to trade higher, in case the FOMC does not fully deliver in expectations. Taken for granted that the labor market is stumbling, while recent softer inflation data has stoked concerns about broader economic weakness, and the earlier dismal US housing data released, investors should bear in mind that is more than probable that the FOMC will play a more dovish scenario. This can be done in many ways, one of them is through a dovish tapering in QE in addition with a shift in the Fed’s forward guidance thresholds.
Technical Outlook and Strategic Bias on EUR/USD
Generally speaking a dovish FOMC played scenario i.e. light tapering with some additional forward guidance will hurt the greenback and vice-versa. Marc Chandler Global Head of Currency Strategy, on behalf of BBH Currency Strategy Team suggests that “We have argued that if the Fed does taper, it is not because the economy is overheating. Nominal growth during this recovery has been, and continues to be, weak compared with other recovery periods….Expectations of the size of the tapering have themselves been tapered. The consensus appears to be for $15 bln (split between $10 bln less Treasuries and $5 bln less MBS). We hasten to add that it is not just monetary policy that is becoming less stimulative.”