EUR holds its own - Rabobank

Sandeep Kanihama FXStreet Contributor

Jane Foley, Senior FX Strategist at Rabobank, suggests that they expect the recent upside potential to be tough above the EUR/USD 1.20 level in 2018

Key Quotes

“ECB President Draghi promoted a cautious outlook on inflation at his December press conference and signalled that the Eurozone economy is not yet strong enough to warrant a reduction of policy stimulus. That said, there was no strong expectations in the market that the ECB would be hiking rates in 2018. The big questions in the market surrounding the ECB relate to whether QE will be drawn to a close after 2018’s nine month tapered extension and in which quarter the following year the central bank is likely to hike.”

“Although the dovish tone of ECB President Draghi on inflation weighed on the EUR, given the substantial upward revision to Eurozone growth estimates and the increased growth risks that are now seen by the ECB, the EUR has likely been provided with adequate sustenance to hold off another bout of USD strength. That said, the market is already long of the single currency. As a consequence, we expect upside potential to be tough above the EUR/USD 1.20 level in 2018.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

AUD/USD sticks to neutral bias above 0.7100 amid bullish USD undertone

AUD/USD holds steady above 0.7100 during the Asian session on Monday as the US Dollar stalls its modest pullback from the highest level since late July amid persistent geopolitical uncertainties. Adding to this, the Fed's hawkish outlook supports the buck. However, bets on another RBA rate hike underpin the Aussie ahead of Governor Bullock's speech and Australian jobs data on Tuesday and Thursday, respectively.

USD/JPY steadies around 157.00 as BoJ's dovish rate hike undermines JPY

USD/JPY edges up at the start of a new week, stalling its retracement slide from 158.00, or a two-week top touched in reaction to the BoJ's dovish rate hike on Friday. Escalating tensions in the Middle East, along with bets for another Fed rate hike this year, lend some support to the US Dollar and the currency pair. Bulls, however, seem hesitant and await further geopolitical developments.

Gold remains depressed below $4,400 as Fed hike bets and Mideast jitters support USD

Gold struggles to capitalize on its recovery gains registered over the past two days and attracts fresh sellers at the start of a new week. The risk of a broader Middle East conflict helps the safe-haven US Dollar stall Friday's retracement slide from the highest level since late July. Moreover, the Fed's hawkish outlook supports the buck and keeps the non-yielding bullion depressed below $4,400.

The week ahead: Hawkish Fed sets the tone for flash PMIs, SNB decides on policy

The US dollar outperformed all its major peers this week, putting it on the front foot in anticipation of a hawkish Fed before Wednesday, and accelerating its advance after the central bank satisfied the hawkish market bets.

CFTC Report: Positioning turns more defensive as Yen longs build

The week in one sentence: Yen positioning surged into a sizeable net long in the week to September 15, while Oil buying accompanied a sharp price increase. CAD shorts also retreated, but Gold exposure remained crowded despite a lower price. Euro and Australian Dollar positioning weakened alongside softer currencies.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.