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5 Jan 2015
EUR/USD may see a choppy move towards 1.14 levels – SG
FXStreet (Barcelona) - Kit Juckes of Societe generale, sticks to the 1.14 forecast for the EUR/USD pair, anticipating the move towards it to be choppy than a straight line decline, noting that ‘sell rallies’ will be the bland mantra everyone will resort to.
Key Quotes
“The prospect of an election in Greece on January 25, and the possibility of ECB sovereign QE on January 22, has seen the Euro fall a further 2% against both US dollar and Japanese yen over the Christmas break.”
“ECB President Mario Draghi's interview with Handelsblatt, which seemed to indicate QE is coming, came as Spanish CPI inflation fell to -1.1% in December, a far bigger falll than expected.”
“We have German CPI data today and Euro Area figures on Wenesday. Germany's inflation rate is expected to have fallen from 0.5% to 0.2% and any further downside surprise will, of course, heighten expectations of action - if that is possible from here.”
“With EUR/USD 1.20 stops triggered and the acceleration downwards complete, we are inevitably wary about the outlook for much more weakness in the very short term. 'Sell rallies' will be the bland mantra everyone resorts to.”
“IMM speculative postioning data for the week to December 23 show that while JPY and EUR shorts haven't increased further they are, added together, at extremely high levels which may not be sustainable. So the move in EUR/USD (and USD/JP{Y) is more likely to be choppy than a straight line. Still, the EUR/USD 1.18 consensus forecast will come down. We stick with 1.14.”
Key Quotes
“The prospect of an election in Greece on January 25, and the possibility of ECB sovereign QE on January 22, has seen the Euro fall a further 2% against both US dollar and Japanese yen over the Christmas break.”
“ECB President Mario Draghi's interview with Handelsblatt, which seemed to indicate QE is coming, came as Spanish CPI inflation fell to -1.1% in December, a far bigger falll than expected.”
“We have German CPI data today and Euro Area figures on Wenesday. Germany's inflation rate is expected to have fallen from 0.5% to 0.2% and any further downside surprise will, of course, heighten expectations of action - if that is possible from here.”
“With EUR/USD 1.20 stops triggered and the acceleration downwards complete, we are inevitably wary about the outlook for much more weakness in the very short term. 'Sell rallies' will be the bland mantra everyone resorts to.”
“IMM speculative postioning data for the week to December 23 show that while JPY and EUR shorts haven't increased further they are, added together, at extremely high levels which may not be sustainable. So the move in EUR/USD (and USD/JP{Y) is more likely to be choppy than a straight line. Still, the EUR/USD 1.18 consensus forecast will come down. We stick with 1.14.”