EUR/USD unlikely to correct meaningfully lower until... ? - Westpac

Analysts at Scotiabank explained that the EUR is unlikely to correct meaningfully lower until the ECB makes a formal tapering announcement.

Key Quotes:

"The ECB has three meetings left this year: Sep 7, Oct 26 and Dec 14. Draghi said an announcement could be made in “Autumn”, which puts the spotlight on Oct 26. The USD’s price action during the 2013 taper tantrum is instructive."

"Chair Bernanke first uttered the possibility of tapering on 22 May 2013 and the Fed formally announced tapering at their 18 Dec 2013 meeting. The USD and US yields were well supported over that entire interim period and saw mild further gains into Jan 2014. But with tapering all but priced in by then, US yields and the USD fell from Jan to May 2014. EUR and bund yields may well behave similarly.