EUR/USD managed to find a bottom in the recent slide, at least for now. So, are the upcoming meetings already priced in?
No, says the team at BTMU and explains:
Here is their view, courtesy of eFXnews:
EUR/USD is likely to remain under downward pressure heading into the ECB’s upcoming policy meeting in early December, says Bank of Tokyo Mitsubishi (BTMU).
“ECB Chief Economist Praet has provided a further clear signal that the ECB will soon ease policy further. He struck a dovish tone expressing concern that inflation expectations could become unanchored and the ECB could lose policy credibility if it delays the projected return of inflation to target. He added as well that the zero lower bound may be lower than the ECB thought months or years ago. The comments signal that the ECB is unlikely to disappoint market expectations for at least a 0.10 point reduction in the deposit rate, and will likely leave the door open as well for further reductions if required. The ECB is expected to extend the duration of their QE programme at least into the first half 2017, and potentially increase the pace of monthly purchases as well,” BTMU notes.
“In marked contrast the Fed remains on course to begin raising rates in December. It has been well flagged by the Fed who is also reiterating that rates will rise only gradually. Still we do not believe that the upcoming ECB and Fed announcements are yet fully priced into EUR/USD which remains subject to downside risk,” BTMU adds.
BTMU sees EUR/USD trading in a 1.0500-1.0850 near-term.
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