Euro Dollar Rate Forecasts for 2014-2015 - page 26
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EUR/USD: When Will The Recovery Meet A Key Hurdle? - SocGen
Having tested key support near 1.05/1.04 back in March, EUR/USD has embarked on a recovery and it is noteworthy that historically this channel has lent support after elongated down moves (e.g. post five year and six year downtrends in 1985 and 2000 respectively), notes SocGen.
"Current monthly close, if largely positive, would form a bullish engulfing. The rebound since March has accelerated recently after the pair broke above a triangle within which it consolidated for nearly five months," SocGen argues.
EUR/USD has hit an intermittent target of 1.1680, the 38.2% retracement from last October. However, sustaining above the triangle limit of 1.1385/70, the recovery should be persistent. Monthly RSI too shows further room before it touches a resistance trend and the pair is likely to head towards 1.1810/75, the weekly channel limit and the 38.2% retracement from last year highs," SocGen projects.
"From an Elliot standpoint, this recovery appears to be the fourth wave within a larger downtrend and still looks to be of corrective nature. Considering this, 2012 lows of 1.20/1.22 should be able to block this move," SocGen adds.
Morgan Stanley: EUR/USD Has Not Topped Yet
Morgan Stanley saw it coming. Their Global FX Strategy Team got it right on both of their timely shift to a tactical bullish EUR view last week, and on their potential targets of this EUR rally (1.15, and then 1.17).
Strategy-wise, Morgan Stanley also got it right on recommending to initiate a long EUR/CAD position at the market close (NY EOD) on Thursday (Aug 20). The trade met its target at 1.55 (~800 pips profit) during the first hour of the NY session on Monday (Aug 24).
So, how Morgan Stanley's FX strategists see the current EUR/USD rally after it met their targets early this week?
"EUR/USD has not topped yet," said Hans Redeker, Ian Stannard, and Sheena Shah from Morgan Stanley's Global FX Strategy team London in their note to clients today (Aug 25).
"The EUR upward correction is not yet complete, in our view, and after a couple of days we expect EURUSD to start another attempt to the upside, preferably starting this move from levels near 1.1450," they projected.
And here is one of their strategies to play the EUR this week:
"EURJPY: If you need to sell EUR: For investors considering selling EUR, we advise looking at EURJPY as the ECB may have a bigger incentive to keep EUR low compared to the BoJ’s incentive to weaken JPY," they advised.
source
Of course it did not top yet :even FED member are on a "talk the USD down" mission - Yellens orders
Level 1.13 being tested. More than 400 pips in 2 days. Not so boring autumn ahead
EUR/USD: A 'Blow-Off': S/T Top In Place? - UOB
The bullish EUR phase that started last Friday has likely ended with the break below 1.1360 yesterday, argues UOB Group.
"The spike to the high of 1.1710/15 is likely a ‘blow-off’ and as we highlighted in our update yesterday, the odds for move to reclaim 1.1710/15 is rather low," UOB adds.
"From here, we believe the current weakness is a corrective pull-back but in view of the large moves recently, the down-move could extend lower to test the major support at 1.1215 with an outside chance for a deeper drop to 1.1105. On the upside, strong resistance is at 1.1560 ahead of the now very strong resistance at 1.1625," UOB projects.
EUR/USD: Staying Bearish; Widening The Range - BTMU
Given the high level of volatility over the last week, BTMU is widening its EUR/USD range for the week ahead given the prospect of additional volatility. BTMU maintains a bearish bias on the pair sees it trading in a 1.10-1.15 rage over the coming week.
"Equity markets have rebounded and hence perhaps we should expect conditions to improve but there remains a high risk of further near-term volatility, which would no doubt lead to further euro short liquidation and result in EUR/USD moving to the top of our suggested range. However, if today’s more favourable conditions persist, then we will slowly see investors revert their focus back on to incoming economic data from the US ahead of the FOMC meeting on 16th/17th September," BTMU argues.
"Our sense now is that even if conditions continue to improve, the FOMC will likely take the cautious route of maintaining its current policy stance. The ADP employment report will be released in the week ahead, it is likely to show average growth in jobs of around 200k – enough to reassure the market but not strengthen considerably the case for the Fed having to discard caution and hike in September. Still, more favourable economic conditions and data that points to the justification for a rate increase either in October or December should be enough to see the return of EUR/USD sellers," BTMU adds.
USD: Don't Listen To The Fed - Credit Agricole
The US the week ahead is littered with tier one data releases – August payrolls being the most important. In our view data (not Fed speeches) will be the key driver for USD ahead of the final three final Fed meetings of the year.
Notably, markets have effectively priced out a Sept rate hike following Dudley’s recent speech yet data argues that a rate hike is likely nearing (with Sept not entirely off the table).
The second revision of Q2 GDP showed solid broad-based revisions to key sectors while also suggesting that Q3 growth momentum looks strong.
We also look for another solid payrolls print, with the 3mma running at 235k. Other things to watch for are the unemployment rate and wage growth. At 5.3% the unemployment rate is within spitting distance of NAIRU – near 5.0%. AHE growth has stalled recently but we also note a glance at aggregate wage indicators suggests wage growth has risen.
Get Ready For The Return Of EUR Weakness - BNPP
"Our European economics team now expects the ECB to ease its policy stance further via an extension of the QE programme beyond September 2016, most likely announced at the December meeting. They also note further measures are possible.
This reinforces our view that the weaker EUR trend will resume beyond the current period of risk aversion. As we highlight, balance of payments dynamics largely explain the EUR’s strong performance.
However, we see good reasons for those trends to once again turn negative for the EUR, especially with EM central bank flows likely to shift to EURUSD sales."
Steven Saywell, Michael Sneyd, Sam Lynton-Brown - BNP Paribas
USD, EUR, CAD, AUD, NZD: Outlooks For The Coming Week - Morgan Stanley
USD Strong against EM. Bullish.
We see scope for USD strength to continue. However, we distinguish between the performance of USD against low yielding funding currencies, where we see less scope for depreciation, and against commodity currencies and EM, where we expect strength to be focused. Even the risks of a more dovish Fed are unlikely to drive USD to depreciate against this latter group of currencies, as growth prospects in the rest of the world remain below those of the US.
EUR: A Good Time to be a Funder. Bullish.
We see scope for EUR to make further gains over the next few weeks as risk remains bid amidst an environment of uncertainty. EUR was used as a funding currency for many risk-on trades; as these are unwound the currency should see support. The main risk from our bullish EUR view stems from the upcoming ECB meeting, where there is a risk of a more dovish tone from the central bank in light of recent currency depreciation.
CAD: High Conviction G10 Short. Bearish.
Bearish CAD is one of our higher conviction trades in G10. We believe that there is a risk the central bank will need to take a more dovish tone, weighing on the currency. Latest comments from the BoC that macroprudential tools are addressing financial instability suggest that monetary policy will be free to focus on low growth and inflation. An environment of weak oil prices is unlikely to offer support to CAD as well.
AUD: Commodity and China Play. Bearish.
A weak commodity picture and concerns about growth in Asia are likely to weigh on AUD in the near term, and we would expect it to continue to underperform. Ongoing weakness in capex highlights the risks surrounding the currency. The main upside risks stem from the central bank, which has been more hawkish, most recently highlighting the risks of running easy monetary policy for too long. We will watch the upcoming RBA meeting closely.
NZD: Further Weakness to Come. Bearish.
With macro prudential measures expected to further reduce heightened financial system risk and help moderate the Auckland housing market, the RBNZ has left the door open for more significant easing. Weak commodities prices, a struggling dairy sector, and soft global demand should weigh on the small, open New Zealand economy. We expect NZD to continue depreciating as both growth and rate differentials move against the Kiwi."
source
EUR/USD: Staying Bearish; Widening The Range – BTMU
EUR/USD had its time in the sun, but this may be getting close to an end.
The team at BTMU looks at rising volatility and remains bearish:
Here is their view, courtesy of eFXnews:
Given the high level of volatility over the last week, BTMU is widening its EUR/USD range for the week ahead given the prospect of additional volatility. BTMU maintains a bearish bias on the pair sees it trading in a 1.10-1.15 rage over the coming week.
“Equity markets have rebounded and hence perhaps we should expect conditions to improve but there remains a high risk of further near-term volatility, which would no doubt lead to further euro short liquidation and result in EUR/USD moving to the top of our suggested range. However, if today’s more favourable conditions persist, then we will slowly see investors revert their focus back on to incoming economic data from the US ahead of the FOMC meeting on 16th/17th September,” BTMU argues.
“Our sense now is that even if conditions continue to improve, the FOMC will likely take the cautious route of maintaining its current policy stance. The ADP employment report will be released in the week ahead, it is likely to show average growth in jobs of around 200k – enough to reassure the market but not strengthen considerably the case for the Fed having to discard caution and hike in September. Still, more favourable economic conditions and data that points to the justification for a rate increase either in October or December should be enough to see the return of EUR/USD sellers,” BTMU adds.