In view of Kit Juckes, Research Analyst at Societe Generale, the question, this week as it has been for a while, is whether a market with what seem stretched positions in both bonds and FX, can really take EUR/USD on upwards without some kind of correction?
“The main focus will be on Thursday’s ECB meeting and everyone (as far as I can tell) expects the focus to be on the lack of inflation rather than the case for further tapering of the ECB’s bond purchases. There’s clearly some reluctance to rock the boat (both in bond and currency markets) at the start of the summer break. That leaves us with EUR/USD 1.1620 as the next technical target, while on the downside 1.13 is the key support. Recent experience suggests we won’t get to the support line and will just mess about in this range before pushing higher again.”
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