EUR/USD: On Track For A Record Narrowest Trading Range For A Calendar Year
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The stability for the euro continued in September and the currency pair remains on track for recording the narrowest trading range for a calendar year (1.0711-1.1616 currently) since euro trading began in 1999.
However, the equity price collapse for Deutsche Bank in September on fears of the health of the bank underlined ongoing concerns over the health of the banking sector in the euro-zone.
This coupled with political uncertainty with the Italian referendum on constitutional reform on 4th December and the Dutch, French and German elections next year all point to uncertainties that could potentially undermine sentiment and weaken the euro.
We are currently assuming that the tight trading range for EUR/USD may well persist with the extension of QE fully priced and the euro-zone’s large current account surplus providing an offset to the monetary policy divergence that points to a move to the downside.
BTMU targets EUR/USD at 1.10 by end of the year and at 1.08 by end of Q2 2017.