During last week’s press conference, ECB President Mario Draghi suggested that the fundamentals for a weaker currency are now much better. Among other reasons this is due to capped rate expectations and slowing capital inflows.
Due to the falling attractiveness of EUR-denominated risk assets and potentially weaker external trade-related inflows, we see little scope for the capital flow situation to turn more positive in the short term. This in turn suggests that the single currency is becoming more sensitive to the prospects for monetary policy, which have been indicating a weaker currency since the start of the year.
Elsewhere, speculative short positioning has risen to multi-year highs, suggesting that the EUR has become subject to heightened correction risk. However, additional real money outflows may compensate for any speculatively oriented profit-taking.
From that angle we expect EUR rallies to remain a sell, for instance against the USD and the AUD.
**CA maintains a short EUR/USD position from 1.3780 targeting 1.3300.
This content has been provided under specific arrangement with eFXnews.
eFXnews is a financial news and information service. Articles and other information distributed in this service and published on this site are provided in general terms and do not take account of or address any individual user's position. To the extent that some of these articles include suggestions as to various possible investment strategies which users might consider, they do so in only general terms without reference to the personal factors which should determine any user's investment decisions to buy or sell a specific security or currency.
The service and the content of this site are provided and distributed on the basis of “AS IS” without warranties of any kind either, express or implied, including without limitations, warranties of title or implied warranties of merchantability or fitness for a particular purpose. eFXnews and its employees, officers, directors, agents, and licensors do not also warrant the accuracy, completeness or timeliness of the information in any of the articles and other information distributed in this service and included on this site, and eFXnews hereby disclaims any such express or implied warranties; and, you hereby acknowledge that use of the service and the content of this site is at you sole risk.
In no event shall eFXnews and its employees, officers, directors, agents, and licensors will be liable to you or any third party or anyone else for any decision made or action taken by you in your reliance on any strategy and/or advice included in any article and other information distributed in this service and published in this site.
Recommended Content
Editors’ Picks
AUD/USD drops toward 0.6500 after dismal Aussie Retail Sales, mixed China's PMIs
AUD/USD is extending losses toward 0.6500, hit by an unexpected drop in the Australian Retail Sales for March while China's NBS April PMI data came in mixed. Upbeat China's Caixin Manufacturing PMI data failed to lift the Aussie Dollar amid a softer risk tone and the US Dollar rebound.
USD/JPY holds rebound to 157.00 after Monday's suspected intervention-led crash
USD/JPY is trading close to 157.00, staging a solid rebound in the Asian session on Tuesday. The pair reverses a part of heavy losses incurred on Monday after the Japanese Yen rallied hard on probable FX market intervention by Japan's authorities. Poor Japan's jobs and Retail Sales data weigh on the Yen.
Gold price traders remain on the sidelines ahead of FOMC decision on Wednesday
Gold price remains confined in a narrow range as traders prefer to wait on the sidelines. Reduced Fed rate cut bets revive the USD demand and act as a headwind for the metal. Investors now await the FOMC decision and US macro data before placing directional bets.
BNB price risks a 10% drop as Binance founder and ex-CEO Changpeng Zhao eyes Tuesday sentencing
Binance Coin price is dumping, with the one-day chart showing a defined downtrend. While the broader market continues to bleed, things could get worse for BNB price ahead of Binance executive Changpeng Zhao sentencing on Tuesday, April 30.
FX market still on intervention watch
Asian foreign exchange traders will be particularly attentive to any signs of Japanese intervention on Tuesday, following reports of Tokyo's involvement in the market on Monday. This intervention action propelled the yen upward from its 34-year low of 160 per dollar, setting off shockwaves of volatility.