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EUR/USD is still consolidating around 1.18, taking its sweet time after a turbulent and busy week. What’s next?

Here is their view, courtesy of eFXnews:

NAB FX Strategy Research notes that the move up in EUR/USD from the low 1.16s to above 1.18 in the past fortnight (high of 1.1910 on August 2nd) has taken it though the 38.2% retracement level of the entire May 2014-january 2017 downtrend from 1.40 to 1.0340.

“While USD weakness is obviously a big part of the story, the Euro has been the best performing major currency during the run-up of the last two weeks.

Having raised our forecast for EUR/USD at  end-Q3 to 1.17  from 1.12 just a month ago,  we aren’t inclined to lift it further at this stage.

Yet we have to acknowledging the risk we could well print above 1.20 in the coming few weeks, in particular if the USD takes another leg lower (encompassing a clean break of the 92.0 DXY level). The 50% retracement level of the aforementioned move down comes in at 1.2167.

That said, we continue to look for a USD correction into year-end to bring EUR/USD at least modestly lower (current forecast is 1.15),  pending a bigger up-move in 2018. In this respect note that aggregate net speculative IMM futures positioning is now close to historical extremes,” NAB argues.

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