7 May 2015
EUR/USD year-end target at 1.05 – Rabobank
FXStreet (Barcelona) - With rising German yields limiting the downside in EUR/USD, Jane Foley, Senior Currency Strategist at Rabobank, views that the pair might still push lower this year, and maintains a year-end target at 1.05.
Key Quotes
“While the tone of US data releases and speculation regarding the timing for Fed interest rates hikes will continue to have a dominating influence on the USD, EUR/USD has also been impacted by the push higher in Eurozone bond yields.”
“German 10 yr Bund yields has so far this week risen the best part of 30 bps. We argue that while the better tone in Eurozone economic data may have provided a trigger, the move is perhaps largely a function of positioning and therefore technical in nature.”
“Further out, once the current spate of position adjustment has past, we expect some investors to re-enter bullish trades in core Eurozone bonds on the view that limited supply against the backdrop of QE should push yields lower.”
“That said, with reflation pressures appearing in Europe we are considering raising our year-end target for Bund yields. Higher Eurozone yields medium-term have the potential for limiting downside potential in EUR/USD.”
“While we are of the view that EUR/USD can still push lower this year, it is also possible that a base may be coming into view. We maintain a year-end target for EUR/USD around 1.05.”
Key Quotes
“While the tone of US data releases and speculation regarding the timing for Fed interest rates hikes will continue to have a dominating influence on the USD, EUR/USD has also been impacted by the push higher in Eurozone bond yields.”
“German 10 yr Bund yields has so far this week risen the best part of 30 bps. We argue that while the better tone in Eurozone economic data may have provided a trigger, the move is perhaps largely a function of positioning and therefore technical in nature.”
“Further out, once the current spate of position adjustment has past, we expect some investors to re-enter bullish trades in core Eurozone bonds on the view that limited supply against the backdrop of QE should push yields lower.”
“That said, with reflation pressures appearing in Europe we are considering raising our year-end target for Bund yields. Higher Eurozone yields medium-term have the potential for limiting downside potential in EUR/USD.”
“While we are of the view that EUR/USD can still push lower this year, it is also possible that a base may be coming into view. We maintain a year-end target for EUR/USD around 1.05.”