EUR: The single currency threatening ECB’s easing program and

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EUR trading higher on flows, says Jane Foley, Senior FX Strategist at Rabobank, as she discusses Central banks, inflation, and the EUR carry trade.

Central banks acting, but still no inflation

Foley notes that FX market remains interesting with the inflation theme back in focus. She says the market is expecting a very weak US CPI data ahead.

On ECB’s mandate, she sees the central bank missing its inflation target and adopting a dovish tone ahead.Euro sign with dark dramatic clouds symbolizing financial crisis visual

Flows guiding EUR higher

Foley explains the funding currency behaviour of the EUR and how the short covering led to the climb in the single currency. She adds that the EUR lacks the fundamentals to be used as a funding currency and this strength in the euro is bad for the reflationary action taken by the ECB, and believes that the central bank will take steps to counter this.

She further comments that central banks have tried to keep rates lower and still haven’t succeeded to push inflation higher.

She adds how lower petrol prices have failed to contribute to an increase in spending,

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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