EUR/USD: All eyes on the ECB ’account’ - SocGen

According to Kit Juckes, Research Analyst at Societe Generale, with Treasuries basically correcting within the Trump-era range, EUR/USD traders will be watching the ECB ’account’.

Key Quotes

“Our sense is that the ECB wants to avoid sending any kind of hawkish signals that could make their lives more difficult. Pressure to taper and pressure to normalise policy, is growing, but they don’t need the FX market (or the bond market for that matter) to pre-empt any move with excessive volatility and in the currency’s case, excessive strength. Weight that against what feels to me like a great wish within the FX market to buy Euro on a decent dip, and there’s a recipe for a spike higher if the ECB says anything that triggers a break of EUR/USD 1.14. Surely they won’t do that? The upshot is likely to be more range-trading for now. That should help the break lower in EUR/SEK (which we like) but will do nothing to help engineer a break higher in EUR/GBP (for now).”