EUR/USD dropped from the highs and bounced only at lower support. Has it ended the consolidation phase? Is it ready to rise?
Here is their view, courtesy of eFXnews:
EUR/USD: Any Dips On Positioning-Squaring A Buying Opportunity – Credit Agricole
Credit Agricole CIB FX Strategy Research notes that next week will become more active in terms of Euro-Area data releases.
“The main focus will be preliminary September PMI releases, especially as CPI releases will be final revisions and therefore only subject to low surprise potential. In an environment of further improving conditions, we believe that growth is firm enough to compensate for a stronger currency’s dampening impact on inflation developments,†CACIB adds.
“While it cannot be ruled out that the EUR will face some shortterm downside risks, as indicated by elevated speculative long positioning, we believe that dips should still prove a buy, with further room for rising policy expectations putting a floor beneath the single currency,†CACIB argues.
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EUR/USD: Bullish Towards 1.2150 Into Next Week FOMC – BTMU
BTMU FX Strategy Research notes that EUR/USDÂ is still struggling to strengthen against the US dollar beyond the 1.2000-level which is providing strong resistance in the near-term.
However, BTMU maintains a bullish EUR/USD bias in the week ahead which will be dictated by the FOMC’s upcoming policy meeting.
“The Fed will deliver a clear signal over whether they are still planning one more rate hike this year. The recent softer inflation reports with the exception of the August CPI report and the temporary economic disruption from the hurricanes argue in favour of the Fed signalling that another rate hike this year is less likely. The updated projections are likely to signal a slower pace of rate hikes in the coming years as well.  Their FOMC’s longer run projection for the Fed funds rate of 3.00% from back in June appears ripe for a revision lower which could weigh on the US dollar,†BTMU argues.
BTMU is targeting EUR/USD at 1.2150 in the near-term seeing the downside limited to 1.1750.
EUR/USD: FOMC To Cap Upside Next Week But Dips To Remain Shallow & Short-Lived- Danske
Danske Bank FX Strategy Research expects the Fed set to confirm at its next week meeting its intentions to hike rates once more this year.
“In light of a market that is clearly not prepared for this, this would be tempting to conclude that EUR/USD should come lower near term.
But not so fast: relative short-end rates have not been a key driver of the FX market in the year so far – rather ‘euro optimism’ and an associated shift in ECB policy have been essential for the cross. That said, speculative positioning is closing in on stretched levels for EUR/USD longs, suggesting the vulnerability of the FX market to USD-positive news is greater than ‘normal’ at present,†Danske argues.
“We reiterate our call that any dips in EUR/USD will be shallow and short-lived, but, at the same time, emphasise that the speed with which EUR/USD is set to move higher will be reduced going forward,†Danske projects.
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