6 May 2014
EUR/USD approaching ytd high ahead of ECB meeting - Scotiabank
FXStreet (Córdoba) - Camilla Sutton, analyst at Scotiabank, notes that even though risks of a rate cut increase with a higher EUR - now that EUR/USD is approaching to its ytd high - she expects no change in policy next Thursday.
Key Quotes
“EUR is strong, rallying towards its ytd high of 1.3967, almost taunting the ECB that meets on Thursday. We expect no change in interest rate policy; however recognize that as the EUR climbs the risks increase”.
“President Draghi’s framework notes that any tightening in monetary conditions (including a higher EUR) will be met with an interest rate cut. At the April meeting, EUR was trading at 1.37, it is now above 1.39; certainly opening the door to a potential cut (particularly with subdued inflationary pressures)”.
“However the ECB also has a credibility issue where the EUR only took five sessions to recover from its last interest rate cut (November 6th 2013), and the market is growing frustrated with President Draghi’s reliance on words (as oppose to monetary action)”.
“EUR/USD short-term technicals: bullish as most studies continue to warn of upside; we have been looking for a test up to 1.3967 for several weeks and it is approaching”.
Key Quotes
“EUR is strong, rallying towards its ytd high of 1.3967, almost taunting the ECB that meets on Thursday. We expect no change in interest rate policy; however recognize that as the EUR climbs the risks increase”.
“President Draghi’s framework notes that any tightening in monetary conditions (including a higher EUR) will be met with an interest rate cut. At the April meeting, EUR was trading at 1.37, it is now above 1.39; certainly opening the door to a potential cut (particularly with subdued inflationary pressures)”.
“However the ECB also has a credibility issue where the EUR only took five sessions to recover from its last interest rate cut (November 6th 2013), and the market is growing frustrated with President Draghi’s reliance on words (as oppose to monetary action)”.
“EUR/USD short-term technicals: bullish as most studies continue to warn of upside; we have been looking for a test up to 1.3967 for several weeks and it is approaching”.