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EUR/USD: watching Draghi and dovishness from ECB - BTMU

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 14, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - Analysts at Bank of Tokyo Mitsubishi explained that the euro has continued to remain relatively stable against the US dollar so far this year.

    Key Quotes:

    "The euro is deriving support from more risk-averse trading conditions which is encouraging a reduction of short positions."

    "However, we would have expected the euro to have strengthened more notably by now given the recent more “favourable” financial market conditions. EUR/USD jumped from around the 1.1000-level to a peak of around the 1.1700-level in August of last year when risk assets similarly corrected sharply lower."

    "An extension of the ongoing sell off in risk assets in the week ahead would increase the likelihood that the euro will pop higher. It is a view that is reflected in the options market where the demand for EUR/USD calls is increasing. If the euro’s performance continues to prove disappointing in current market conditions it will provide a more bearish signal for future performance."

    "The ECB’s upcoming policy meeting could be helping to dampen euro upside in the near- term. The recent weakening of commodity prices and heightened concerns over growth in emerging economies are likely to prompt dovish rhetoric from President Draghi although it is unlikely he will provide a signal that further easing is imminent."
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