The USD is one of the weakest performing G10 currencies on a one-month view. That said, the fact that the EUR is the second best performer on a five-day view (after the SEK) suggests that the latest move higher in EUR/USD is also a function of EUR strength. to Jane Foley Senior, FX Strategist at Rabobank, EUR/USD could edge higher into the June 10 European Central Bank (ECB) policy meeting. However, any disappointment regarding the tapering discussion could weaken the shared currency.
EUR/USD – further to run?
“EUR/USD could push a little higher in the run up to the ECB meeting. This gathering, however, offers plenty of scope for disappointment which could limit upside potential for the EUR particularly as the market prepares from the Fed meeting on June 16.”
“Speculation is already building that the Fed’s Jackson Hole symposium in August could be a platform to provide a signal about tapering. While near-term fundamentals are USD negative, we see scope for EUR/USD to pull back to the 1.20 to 1.18 area on a three-month view.”
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