FXstreet.com (Barcelona) - The EUR/USD is expected to move erratically around 1.2000 as central banks (ECB and Fed) act, but the Eurozone crisis (discussions of Greece's EMU exit or Italy's loss of market access if Spain’s funding window closes after a downgrade to junk) should trigger some moves below that area.
JP Morgan analysts forecast the pair below 1.2000 in Q3 if the new Greek government falls, Europe ends Greece’s financing program because it considers the new government’s demands unreasonable, or German Constitutional Court rejects ESM. Also bearish is a scenario in which Netherland elects an anti-EMU party or Italy loses bond market access due to high interest rates.
However, if the “Fed launches QE3 with asset purchases above $500bn, EU parliaments signal intention to fast-track banking union and transfer costs of Spanish bank recapitalization to the region, the ECB restarts direct bond purchases in size or grants ESM a banking license with a higher lending ceiling”, the outlook becomes bullish in Q3 and above 1.2500, according to the economists John Normand and Thomas Anthonj, also pointing to the focus on US fiscal cliff and sovereign rating intensification in run-up to US Presidential election as bullish.
JP Morgan analysts forecast the pair below 1.2000 in Q3 if the new Greek government falls, Europe ends Greece’s financing program because it considers the new government’s demands unreasonable, or German Constitutional Court rejects ESM. Also bearish is a scenario in which Netherland elects an anti-EMU party or Italy loses bond market access due to high interest rates.
However, if the “Fed launches QE3 with asset purchases above $500bn, EU parliaments signal intention to fast-track banking union and transfer costs of Spanish bank recapitalization to the region, the ECB restarts direct bond purchases in size or grants ESM a banking license with a higher lending ceiling”, the outlook becomes bullish in Q3 and above 1.2500, according to the economists John Normand and Thomas Anthonj, also pointing to the focus on US fiscal cliff and sovereign rating intensification in run-up to US Presidential election as bullish.
