EURUSD likely to remain in tight range – Westpac

Tim Riddell, Research Analyst at Westpac, notes that the EUR/USD remains tightly range bound as EU political strains and weak economies are offset by ECB’s increasing reticence to add to their current accommodation.

Key Quotes

“Political strains are more evident after discord at recent EU summits. The deterioration of Merkel’s coalition in bi-elections, clarification of the Italian referendum date and the forthcoming Hungarian vote could all weigh on EUR.

However, the clear and vocal reluctance of the ECB to increase its QE and the lowering of Fed’s trajectory for rates will act to keep EUR/USD in recent ranges.

EUR/CHF and USD/CHF also remain painfully range bound. The Swiss State Secretariat’s economic assessment highlighted the persistence of near-term deflation and SNB reiterated its intention to act to contain CHF strength. Unless external factors alter, it is difficult to see what will drive CHF out of its ranges.”