Stay short EUR/USD - ANZ

Ross J Burland FXStreet

Analysts at ANZ explained that there is no doubt that ECB monetary policy is firmly focused on securing a recovery in inflation towards target and, whilst not a policy tool, a weaker exchange rate would be helpful in that regard.

Key Quotes:

"Our forecasts assume that EUR/USD will move towards parity in coming months. If anything, the December ECB policy meeting reinforces that view. And whilst the ECB has mapped out its policy landscape for 2017, there are still material event risks facing the euro area.

The elections in the Netherlands in March, elections in France –presidential election in April/May and Assembly election in June – and general election in Germany in September take place against a backdrop of rising support for populist parties. An election in Italy can’t be completely discounted either.

There is also the issue of bad debts in the banking system, in particular Italy, which needs to be addressed. Against a backdrop where the FOMC will be raising interest rates we advise staying short EUR/USD and selling rallies."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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