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24 Feb 2015
Further downside in EUR/USD expected today – Danske
FXStreet (Barcelona) - Flemming J. Nielsen, Senior Analyst at Danske Bank, views that while ECB’s QE will result in a weaker EUR in the longer-term, today’s expectedly hawkish Yellen’s testimony will trigger further downside in EUR/USD.
Key Quotes
“As the ECB launches its QE programme in March we look for further EUR weakness to materialise in the coming six months – especially against the USD, which is expected to outperform in the coming months.”
“The latest IMM positioning data show that the aggregate bullish USD bets have been reduced to the lowest levels since December, when year-end and profit taking reduced investor appetite for ‘greenback’-exposure.”
“Hence, from a positioning point of view, the IMM data suggest that there should be room for renewed USD strength and we think that this will materialise in the coming months ahead of an increase in the Fed funds rate that we expect to arrive in June.”
“In respect of timing the Fed, today’s semi-annual testimony by Fed chairman Janet Yellen will be very important. Main focus will be on any description of triggers for the first hike and hints of whether the Fed is likely to remove the patience language at the next meeting.”
“We believe she will sound a bit hawkish compared to the latest minutes and look for further downside in EUR/USD today.”
Key Quotes
“As the ECB launches its QE programme in March we look for further EUR weakness to materialise in the coming six months – especially against the USD, which is expected to outperform in the coming months.”
“The latest IMM positioning data show that the aggregate bullish USD bets have been reduced to the lowest levels since December, when year-end and profit taking reduced investor appetite for ‘greenback’-exposure.”
“Hence, from a positioning point of view, the IMM data suggest that there should be room for renewed USD strength and we think that this will materialise in the coming months ahead of an increase in the Fed funds rate that we expect to arrive in June.”
“In respect of timing the Fed, today’s semi-annual testimony by Fed chairman Janet Yellen will be very important. Main focus will be on any description of triggers for the first hike and hints of whether the Fed is likely to remove the patience language at the next meeting.”
“We believe she will sound a bit hawkish compared to the latest minutes and look for further downside in EUR/USD today.”