Markets are too bearish on the Euro - Morgan Stanley

Joshua Gibson FXStreet

According to analysts at Morgan Stanley, broader markets are heading too far into bearish territory on the EUR, as the investment bank expects a decline in the USD looking forward.

Key highlights

Morgan Stanley is looking for a weaker USD in the "coming weeks".

Economic data surprises coming from the US vs the G10 economies could see the Greenback drive lower.

The People's Bank of China (PBOC) is also expected to adjust their policy stance in response to the rising trade war, which could further weaken the USD.

Regarding the EUR

Markets are overpricing into the shortside on European political risks and growth outlooks.

The European Central Bank is unable to ease further, considering bond capacity limits.

A topping pattern in the USD could herald a major EUR leg higher.

The EUR/USD has begun to absorb bearish news, refusing to drop below 1.1510.

Regarding the JPY

Morgan Stanley is anticipating another "leg higher" to 115.

Constrained Japanese yields are expected to keep the USD supported against the Yen.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

EUR/USD remains on the back foot near 1.1750

EUR/USD is coming under renewed pressure, sliding towards multi-week lows in the mid-1.1700s on Thursday. The move lower reflects another strong session for the US Dollar, with the Greenback drawing fresh support from a batch of firm US data that reinforced its underlying bid.

GBP/USD drops further, hovers around 1.3460

GBP/USD is sliding in tandem with its risk-sensitive peers, drifting back towards the 1.3440 area, its lowest levels in around four weeks. The move reflects a firmer Greenback, supported by another round of solid US data, while a somewhat divided FOMC Minutes has added an extra layer of uncertainty around the Fed’s rate path, keeping Cable on the defensive.

Gold clings to daily gains near $5,000

Gold struggles for direction and clings to its daily gains around the key $5,000 mark per troy ounce on Thursday. The precious metal sticks to the bid bias amid reignited geopolitical tensions in the Middle East and despite marked gains in the US Dollar and rising US Treasury yields across the curve.

Ripple slips toward $1.40 despite SG-FORGE tapping protocol for EUR CoinVertible

XRP extends its decline, nearing $1.40 support, as risk appetite fades in the broader market. SG-FORGE’s EUR CoinVertible launches on the XRP Ledger, leveraging the blockchain’s scalability, speed, security, and decentralization.

Hawkish Fed minutes and a market finding its footing

It was green across the board for US Stock market indexes at the close on Wednesday, with most S&P 500 names ending higher, adding 38 points (0.6%) to 6,881 overall. At the GICS sector level, energy led gains, followed by technology and consumer discretionary, while utilities and real estate posted the largest losses.

Injective token surges over 13% following the approval of the mainnet upgrade proposal

Injective price rallies over 13% on Thursday after the network confirmed the approval of its IIP-619 proposal. The green light for the mainnet upgrade has boosted traders’ sentiment, as the upgrade aims to scale Injective’s real-time Ethereum Virtual Machine architecture and enhance its capabilities to support next-generation payments.