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EUR/USD: En-Route To 1.05 In 3M; Market To Keep Selling

EUR/USD is struggling with Brexit  and there is more potential to the downside. And that’s not the only reason.

Here is their view, courtesy of eFXnews:

We are lowering our 3m EURUSD forecast to 1.05 from 1.17 previously, reflecting the likely growth spillover into the wider European region from the UK’s woes.

Our former forecast had anticipated a general jump in European currencies which were all pricing in some degree of Brexit contagion risk premium. Now the bad outcome is realised,  we suspect the market will be consistently looking to sell EURUSD rallies.

EUR peripheral concerns back in the spotlight

Issues such as the Italian constitutional referendum in October also present risk events that need to be priced. Slowing the EUR descent however is the currency’s role as a funding currency, the euro area’s massive current account surplus and the ECB’s pro-active policies to prevent funding difficulties for the banking system as well as to mitigate sovereign credit risk. This is quite a different environment to 2012 and leaves the EUR less vulnerable as long as political shocks can be avoided.

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Yohay Elam

Yohay Elam

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.