Mario Draghi tried to be as dovish as possible, but markets didn’t buy it. The move up on EUR/USD was compounded by the new Trump troubles. What’s next? Here are four opinions:
Here is their view, courtesy of eFXnews:
EUR/USD: Post-ECB: Towards 1.20 Before A Meaningful Correction – SocGen
Societe Generale Cross Asset Strategy Research highlights 2 key points from EUR price action in reaction to today’s July ECB meeting.
“Firstly, this is a meeting in late July, a time when market reactions should not be over-interpreted. Secondly, the FX market typically doesn’t react to shifts in expectations about policy moves in the very short term, and we heard nothing today to alter the view that the ECB is embarking on a gradual shift towards policy normalization, which is inconsistent with an undervalued currency,†SocGen notes.
EUR/USD: What’s Next?Â
“EUR/USD is still moving upwards in tandem with a gradual tightening in real and nominal yield spreads. The euro is rising faster than seems consistent with the move in yields, but that’s consistently been the case since March. At some point, this is going to result in a correction for the euro, but we suspect that EUR/USD will reach 1.20 first,†SocGen argues.
EUR: ECB likely To Announce Details Of QE Exit Strategy At Next Meeting – SEB
SEB Research comments on the outcome of today’s ECB July policy meeting.
“The ECB left policy rates, QE programme and its forward guidance in terms of bias, timing and sequencing unchanged at its meeting today. The outcome was in line with what majority of forecasters had expected.
Our impression is that Draghi struggled to not say anything that would worry the markets, but at the same time not make promises he did not have support to fulfill. Possibly this could be due to differing views within the governing council, even-though Draghi said that the council was unanimous.
