EUR/USD still has limited downside - Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 22, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - Analysts at Rabobank explained that it is not often that a central bank manages to deliver a significant easing of monetary conditions through an as expected steady policy announcement but, by knocking the EUR significantly lower with promises of more policy stimulation, ECB President Draghi this week managed just that.

    Key Quotes:

    "It is not the first time that Draghi has manipulated markets with little more than words and promises. Between the middle of 2014 and early last year Draghi had presided over a substantial weakening in the value of the EUR as he whipped the markets into a frenzy of anticipation ahead of the introduction of QE. "

    "A weaker EUR would clearly be a useful tool in the ECB’s efforts to restore inflation back towards its target and to reduce the risk that expectations of near zero inflation become entrenched in the Eurozone. However, for the past ten or so months the EUR has been reluctant to give up ground. Although we see potential for EUR/USD to trend lower this year, we also see the downside as limited."
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