EUR/USD: Trump and the Fed, now watch out for Europe - Scotiabank

Analysts at Scotiabank explained that EUR/USD traded as high as 1.13 or so in overnight trading before steadying back to more recently familiar levels.

Key Quotes:

"The Trump win will prompt a fair amount of focus on Fed policy prospects and this may be the weak link in the USD story in the near-term; so much focus has fallen on the Fed, tightening risks and short-term rate spreads driving the USD higher that any retrenchment in short-term US yields can only boost EURUSD."

"Fundamentally, we think the market (and our own bias) is shifting from a sell EUR rally to a buy EUR dip approach.

We caution, however, that the apparent strengthening in populist politics leave the EUR itself vulnerable to shocks (Italian referendum, French presidential election) down the road?