21 May 2015
Under the microscope; EUR/USD fundamentals - BTMU
FXStreet (Guatemala) - Lee Hardman, currency analyst at The Bank of Tokyo Mitsubishi UFJ, explained that the euro’s recent rebound against the US dollar ran out of steam over the last week supporting their view that the rebound was unsustainable.
Key Quotes:
"Position adjustment which now appears complete likely exaggerated the recent strength of the euro. The euro has also been undermined by the announcement from the ECB that it will moderately front-load QE purchases this month and next. The timing of the announcement has prompted some speculation that the ECB is uncomfortable over a further strengthening of the euro in the near-term."
"The latest leading indicators including the PMI surveys are signaling that the euro-zone economy is beginning to lose some upward momentum. The initial boost to the euro-zone economy from significant stimulus may be beginning to fade."
"The recent adjustment higher in euro-zone yields, euro and price of crude oil may have dampened business confidence. Investor concerns over a potential Greece default have increased as well as the government is quickly running out of time to secure the release of short-term financing."
"The US dollar appears to be forming a tentative bottom in the near-term. For a sustained rebound building evidence of strengthening US economic growth momentum will be required. A speech tomorrow from Fed Chair Yellen will be watched closely for any fresh signals regarding the outlook for monetary policy."
Key Quotes:
"Position adjustment which now appears complete likely exaggerated the recent strength of the euro. The euro has also been undermined by the announcement from the ECB that it will moderately front-load QE purchases this month and next. The timing of the announcement has prompted some speculation that the ECB is uncomfortable over a further strengthening of the euro in the near-term."
"The latest leading indicators including the PMI surveys are signaling that the euro-zone economy is beginning to lose some upward momentum. The initial boost to the euro-zone economy from significant stimulus may be beginning to fade."
"The recent adjustment higher in euro-zone yields, euro and price of crude oil may have dampened business confidence. Investor concerns over a potential Greece default have increased as well as the government is quickly running out of time to secure the release of short-term financing."
"The US dollar appears to be forming a tentative bottom in the near-term. For a sustained rebound building evidence of strengthening US economic growth momentum will be required. A speech tomorrow from Fed Chair Yellen will be watched closely for any fresh signals regarding the outlook for monetary policy."