According to Jane Foley, senior FX strategist at Rabobank, EUR/USD is likely to struggle to build on recent gains.
“CFTC data demonstrate that going into the end of last year that the market was positioned long of USDs and short of EURs. Clearly this made the USD more vulnerable than the EUR to bad news.”
“How much further the USD will fall vs. the EUR, however, depends heavily on how much the market wants to rebuild EUR positions.”
“For the EUR, the likelihood that the withdrawal of ECB policy stimulus this year is likely to be extremely cautious should temper upside potential. In addition the likelihood that the forthcoming European parliamentary elections will draw focus back to populism could weigh on the EUR into the spring. We thus see the potential for the recent recovery in EUR/USD to stall in the coming weeks and see scope for the currency pair to head back into its recent range. The 200 day sma is likely to provide resistance in the EUR/USD1.1625 area. On the weekly chart the 100 week sma lies near 1.1613.”