Richard Franulovich, Research Analyst at Westpac, suggests that the latest USD run-up may have real legs. Key Quotes “Spec exposure to the USD has fallen precipitously in recent weeks, yet several key data points (Jan average hourly earnings, core CPI, core PCE) signal that the US economy may be finally closing its under-used resources gap. The USD index has been held to a broad 93 - 100 range for more than twelve months and for the first time in many months it looks well positioned to mount a serious attack at the key 100 resistance level. Draghi will be acutely sensitive to avoiding a repeat of the Dec debacle where he under-delivered on much hyped expectations. A 20bp deposit rate cut and an expanded QE program, possibly up to E30bn (to EUR90bn per month) seems plausible, more than markets currently expect. USD should sail higher into and after the ECB meeting.” For more information, read our latest forex news.