Strategists at Westpac have recommended selling spot on occasional bullish attempts.
Key Quotes
“EUR firmed through Jan, from sub-1.04 to highs near 1.0830, backed by less negative yield spreads as stronger data in the Eurozone and elsewhere put the US in a less exceptional light and as Trump reflation expectations took a hit. But, since then core EZ-US 2yr spreads have retraced almost all of that Jan move and appear poised to break-out to new EUR-negative lows. Yet, EUR/USD has only retraced about 50% of the Jan rally”.
“n the wake of the more hawkish lean to Chair Yellen's testimony March Fed hike odds can drift yet higher (now 34%, can get to 40-50% before they stabilise). Between now and the end of next week there are eight Fed speaking engagements scheduled though that number is sure to grow. A clear theme should emerge that the 15 March FOMC is live. President Trump's address to a joint session of Congress 28 Feb is shaping up as a key date too - he could finally outline some precise markers on tax cuts/reforms and infrastructure beyond campaign promises. Meanwhile on the EUR side, safe haven flows are likely to suppress core bund yields at least until upcoming elections in the Netherlands (March 15) and then France (2nd round run-off 7 May) are out of the way. Sell EUR/USD into strength above 1.06 for a continuation of the down move”.
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