26 Mar 2014
EUR/USD trend looks broadly intact - Nomura
FXStreet (Bali) - Nomura FX Strategists Jens Nordvig and Franklin Wang, expect the broad EUR/USD uptrend to continue firm in the next few months.
Key Quotes
"The euro has been in a clear uptrend since April 2013. In individual crosses this can sometimes be hard to see as they are buffeted by idiosyncratic impulses. EURUSD, for example, has been pushed lower by batches of USD strength, which has temporarily upset the EUR uptrend. But if we look at the EUR TWI, the uptrend is clearer."
"Our latest forecast revision, which was implemented after the ECB signaled that no additional easing was forthcoming in the near future, is to some degree extrapolating this trend. At that time, we put down a forecast for EURUSD to move to 1.40 by end-Q1 and peak around 1.42-1.43 during Q2 2014."
"The key assumptions behind this forecast were that 1) portfolio flows, which have been supportive for the euro for at least a year, would remain healthy in coming months, and 2) the ECB would ignore the deflation threat for the time being. In the context of EURUSD specifically, the assumption was that a dollar-supportive impulse would be delayed, and not enter forcefully into the equation until H2 2014."
Key Quotes
"The euro has been in a clear uptrend since April 2013. In individual crosses this can sometimes be hard to see as they are buffeted by idiosyncratic impulses. EURUSD, for example, has been pushed lower by batches of USD strength, which has temporarily upset the EUR uptrend. But if we look at the EUR TWI, the uptrend is clearer."
"Our latest forecast revision, which was implemented after the ECB signaled that no additional easing was forthcoming in the near future, is to some degree extrapolating this trend. At that time, we put down a forecast for EURUSD to move to 1.40 by end-Q1 and peak around 1.42-1.43 during Q2 2014."
"The key assumptions behind this forecast were that 1) portfolio flows, which have been supportive for the euro for at least a year, would remain healthy in coming months, and 2) the ECB would ignore the deflation threat for the time being. In the context of EURUSD specifically, the assumption was that a dollar-supportive impulse would be delayed, and not enter forcefully into the equation until H2 2014."