Chief Currency Strategist at Westpac Richard Franulovich remains of the view that bullish attempt above the 1.0600 area remain selling opportunities.
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. Since then core EZ-US 2yr spreads have retraced almost all of that Jan move and appear poised to break out to new EURnegative lows. Yet EUR/USD has only retraced about 50% of the Jan rally”.
“Fed March hike odds around 45% are approaching a near term ceiling but should remain at least at current levels and could drift a touch higher going into Trump’s address to a joint sitting of Congress”.
“Meanwhile on the EUR side, safe haven flows are likely to suppress core bund yields at least until upcoming elections in the Netherlands (15 March) 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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