EUR/USD heading lower towards 1.05 - Natixis

Nordine Naam, Research Analyst at Natixis, suggests that w

Key Quotes

“The euro is also under the cosh because of the risks overhanging Europe. The market’s attention has shifted to European domestic factors, notably the Italian referendum on 4 December and the prospect a further QE extension by the ECB, expectations being that asset purchase programme will run for a further six months until September 2017.”

“In this environment, the EUR/USD should correct towards 1.07 in December given the divergence in the monetary policies of the Federal Reserve and the European Central Bank. The EUR/USD is declining more rapidly than expected towards our initial 1.05 objective for 2017, which could in fact be reached this year. This will largely depend on the tone of the Federal Reserve when it meets on 14 December and on the employment data published at the start of December, notably hourly earnings, which have recorded their strongest growth of late (+2.8% month-on-month in October).”