With the further escalation of the trade war between the US and China in August and a British government that has set its course for a hard Brexit, market concerns have generally increased. So far, the EURUSD has reacted relatively cautiously to these developments and remained within a range. In our view, the markets are not yet fully prepared for a hard Brexit. This means that, with further steps in this direction, which we expect, the euro should come under further pressure. We leave our forecast for the EURUSD at 1.10 at the end of the year unchanged. In the hot phase of Brexit during the coming weeks, however, this mark could be undercut. The only thing that would speak in favor of the euro would be an orderly withdrawal of the United Kingdom from the EU, which is unlikely at present.

 

JPY: Yen continues to firm

The yen strengthened against the euro to a level of 117 in August. At its meeting at the end of July, the Japanese central bank announced further monetary easing if a further deterioration in the global economy were to jeopardize the price stability target. Japan's inflation stabilized in July at +0.6% y/y. Over the past two years, Japan's inflation averaged around +0.8%, well below that of the Eurozone (+1.6%). From a fundamental point of view, this has supported the yen vs. the euro. In order for the yen to weaken against the euro, the outlook for the global economy has to brighten. After the recent escalation of the trade war, however, this seems rather unlikely in the short term. The consensus on Bloomberg expects the euro to strengthen against the yen to 119 in 4Q19.

 

CHF: Firming pressure continues

Triggered by speculation about a possible easing of monetary policy by the ECB, the franc recently strengthened against the euro to a level of 1.085. In addition, persistently weak leading indicators further strengthened the franc. Now that we expect the ECB to substantially ease its monetary policy on September 12, it is possible that the SNB could also ease its own monetary policy stance in response at its meeting on September 19. Given the political developments in the United Kingdom, we expect a hard Brexit at the end of October. This should further increase firming pressure on the Swiss franc, especially at the end of October. Should further geopolitical crises escalate acutely (trade dispute, Italy), the franc could, as recently happened, quickly strengthen against the euro at any time.

Download The Full Forex News

This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD tension remains elevated ahead of the Fed

EUR/USD is trading above 1.1050, in a narrow range ahead of the all-important Fed decision. Chair Powell is set to cut rates but signal no further stimulus is on the cards.

EUR/USD News

GBP/USD extends its falls to 1.2450 amid weak UK inflation, Brexit impasse

GBP/USD has dropped to around 1.2450 as UK headline CPI missed with 1.7% in August. Brexit negotiations remain stuck according to Chief EU negotiator Barnier. The Fed decision is eyed.

GBP/USD News

USD/JPY holds on to recovery gains above 108.00 ahead of Fed

Not only upbeat trade numbers from Japan but upbeat trade/political headlines also help the USD/JPY pair to remain firm around 108.20 prior to Wednesday’s European session. Focus on FOMC decision.

USD/JPY News

Forex Today: Fed set to trigger high volatility, oil falls, altcoins advance

Tension is mounting ahead of the Federal Reserve decision later today. Economists expect a 25 basis point rate cut amid slowing global growth and investment. 

Read more

Gold seesaws around $1,500 with all eyes on FOMC

With the global traders on a wait and see approach ahead of the key event, Gold offers fewer moves while taking rounds to $1,500 during Wednesday’s Asian session. Also supporting the bulls were positive statistics from the US and the Eurozone.

Gold News

Forex Majors

Cryptocurrencies

Signatures