EUR/USD made a clear break of resistance but is still off the highs. What’s next?
Here is their view, courtesy of eFXnews:
NAB FX Strategy Research notes that the foundations for a broad EUR revival from the removal of European political risks and a strong economic rebound are still in place.
In that regard, NAB believes the EUR is in the midst of a modest revaluation higher, having been held back at arguably false levels thanks to prior European political risks, easy ECB policy and anticipated Fed tightening.
“Recent price action reveals that as all the ducks aligned here in the single currency’s favour that re-pricing started and has created its own momentum sucking in both speculative and underweight longer-term asset managers,” NAB adds.
Technically, NAB notes that the break higher was constructive with a move above 1.0850, which has acted as something of a pivot since the 9 November Trump-win USD rise/EUR plunge.
“More broadly we talk of EUR/USD sporadically flip-flopping between approximate 1.050-1.10 and 1.101.15 ranges for the last two and a half years. We believe the step-up currently taking place is being driven by factors sufficient to see it hold that higher 1.10-1.15 range, awaiting the outcome of the June 8-14 ECB-Fed policy meetings,” NAB argues.
EUR/USD is trading circa 1.12 as of writing.
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