EUR/USD is a bit higher in the new trading week. Can it last?
The team at Credit Agricole casts doubts:
Here is their view, courtesy of eFXnews:
Risk sentiment has been unstable of late, mainly on the back of rising Fed rate expectations. Friday’s stronger than expected US labour data should reinforce the view that the Fed is considering higher rates in September. While such prospects should keep the USD in demand, they should come to the detriment of liquidity expectations and investors’ appetite for risk assets too. Nevertheless, from a broader angle further improving global growth expectations should compensate for falling liquidity expectations.
Elsewhere, we remain of the view that the EUR should be sold on rallies. While Greece-related uncertainty is likely to keep demand for EUR-denominated assets muted, the ECB made clear that QE will run its course regardless of improving growth and price developments.
This suggests that there is additional room of diverging Fed-ECB monetary policy expectations to the detriment of EUR/USD.
Ahead today it will be quiet in terms of market moving data releases. If anything the main focus will be on speeches by ECB members and ongoing developments as related to Greece.
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