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15 May 2015
EUR/USD rebound unlikely to be sustained – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, expects Draghi to continue the QE purchases beyond September 2016, and further sees the current EUR/USD strength as unlikely to extend beyond current levels on a sustained basis.
Key Quotes
“The euro has been one of the main beneficiaries from the US dollar’s recent correction lower. EUR/USD has rebounded by almost 10% since its intra-day low of just above 1.0450 from March. It is now moving back to within touching distance of levels which were recorded prior to the ECB’s QE announcement on the 22nd January when it was trading just above the 1.1600-level.”
“The initial negative impact of the ECB’s QE announcement in weakening the euro is being reversed as real yields in the euro-zone have rebounded modestly.”
“At the current juncture we still believe that it is premature to expect the euro to stage a sustainable rebound. The scope for further upside is likely to become more limited beyond current levels.”
“As emphasized yesterday by President Draghi the ECB is likely to continue implementing aggressive monetary easing at least until the end September of next year which should remain a weight on the euro dampening the scope for further upside.”
“It also remains more likely in our view that the ECB could extend QE beyond the end of September of next year rather than cutting short QE by ending purchases earlier and/or tapering the size of monthly purchases.”
Key Quotes
“The euro has been one of the main beneficiaries from the US dollar’s recent correction lower. EUR/USD has rebounded by almost 10% since its intra-day low of just above 1.0450 from March. It is now moving back to within touching distance of levels which were recorded prior to the ECB’s QE announcement on the 22nd January when it was trading just above the 1.1600-level.”
“The initial negative impact of the ECB’s QE announcement in weakening the euro is being reversed as real yields in the euro-zone have rebounded modestly.”
“At the current juncture we still believe that it is premature to expect the euro to stage a sustainable rebound. The scope for further upside is likely to become more limited beyond current levels.”
“As emphasized yesterday by President Draghi the ECB is likely to continue implementing aggressive monetary easing at least until the end September of next year which should remain a weight on the euro dampening the scope for further upside.”
“It also remains more likely in our view that the ECB could extend QE beyond the end of September of next year rather than cutting short QE by ending purchases earlier and/or tapering the size of monthly purchases.”