23 Mar 2015
USD taking a breather before resuming the upside – Danske Bank
FXStreet (Edinburgh) - Allan von Mehren, Chief Analyst at Danske Bank, sees the post-FOMC softness in the greenback as temporary.
Key Quotes
“As the USD struggles to re-gain strength following the FOMC's reluctance to pre-commit to an early rate hike, speculation whether it is game over for the dollar rally mounts”.
“However, we think the greenback is merely taking a breather before a next leg lower. What should drive this? The easy answer is: a strong payroll report in April; a more nuanced answer is that USD positioning, which has been stretched on longs and rose further against the EUR ahead of the Fed meeting (on IMM data), must see more liquidations before there is room for a new build”.
“A key trigger for a next move lower in EUR/USD could be a narrowing of the currently wide gap between (positive) euro-zone and (negative) US data surprises and/or renewed worries over the lack of Greek reforms”.
“We think EUR/USD will stay below 1.10 near term and still target 0.99 in 6M”.
Key Quotes
“As the USD struggles to re-gain strength following the FOMC's reluctance to pre-commit to an early rate hike, speculation whether it is game over for the dollar rally mounts”.
“However, we think the greenback is merely taking a breather before a next leg lower. What should drive this? The easy answer is: a strong payroll report in April; a more nuanced answer is that USD positioning, which has been stretched on longs and rose further against the EUR ahead of the Fed meeting (on IMM data), must see more liquidations before there is room for a new build”.
“A key trigger for a next move lower in EUR/USD could be a narrowing of the currently wide gap between (positive) euro-zone and (negative) US data surprises and/or renewed worries over the lack of Greek reforms”.
“We think EUR/USD will stay below 1.10 near term and still target 0.99 in 6M”.