Divergence in central bank policy is making trading currency pairs easier, noted Craig Erlam, Senior Market Analyst for Oanda, on the Tip TV Finance Show when he joined Nick Batsford and Zak Mir to discuss the EUR/USD, GBP/USD and USD/JPY.
Parity on the cards for the EUR/USD
Erlam outlined that if the ECB acts alongside Fed in December, parity could be a possibility by the end of the year. He added that currently the pair is seeing consolidation, with a correction to the 1.09 level likely in the short-term.
BoE change in policy key for downside
Erlam continued to Cable, where he highlighted the BoE dovish tones with a UK rate hike being pushed back around 12 months. He commented that the USD is shining through in the GBP/USD pair, and more downside to 1.4850 is possible.
Further upside for USD/JPY
Erlam finished on USD/JPY, where he believed the pair may see another leg higher with 126.00 being an important area. Erlam added that this is the likely case, unless the Bank of Japan stimulate further which could push USD/JPY to 135.00 next year.
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