EUR/USD recorded sharp losses in the month of September. What is the outlook for the pair going into year-end?
Here is their view, courtesy of eFXdata:
CIBC Research discusses EUR/USD outlook and adopts a neutral bias on the pair going into year-end.
“The combination of an earlier re-opening and a less dovish central bank compared to the Fed, led to an aggressive expansion in EUR longs over the summer. Speculative positioning reached all-time extremes into the end of August, with the position extension coinciding with the change in Fed policy to average inflation targeting. An unwinding of such positions, triggered by global risk aversion that favours the greenback, alongside eurozone data that added up to an easing the eurozone surprise index, has put a temporary stall into the euro’s march stronger. We expect EURUSD to remain near 1.17 into year-end,” CIBC notes.
“Looking ahead into 2021, the arrival of vaccines, and the fading of the current second wave, should encourage renewed euro momentum. The ECB has noted that it’s attentive to the impact of FX gains on inflation and inflation expectations, but we don’t expect any serious push back in term of policy levers that would stand in the way of reach 1.20 on EURUSD next year as long as a recovery is underway,” CIBC adds.
For lots more FX trades from major banks, sign up to eFXplus
By signing up for eFXplus via the link above, you are directly supporting Forex Crunch.
Share
