EUR/USD stuck in range – 1.20 or 1.1475? 3 opinions

EUR/USD is getting comfortable around 1.17-1.1750. Where next? Here are three opinions:

Here is their view, courtesy of eFXnews:

EUR/USD: Dips To Be Limited To 1.1475 ‘At The Extreme’ Around ECB Sep Meeting – NAB

NAB FX Strategy Research retains its 7 September call for an ECB taper announcement,  that can also see Draghi warn about the EUR in the hope of holding back gains.

“If we are wrong, the ECB will not be able to wait past the 26 October, which other than a possible knee-jerk EUR dip in September, ought not to see much overall change.

We think the EUR’s downside here will be limited to 1.1475 at the extreme, but more likely somewhere within a 1.1475-1.1625 range and closer to the top end, with the EUR recovering after that and ahead of the October meet,” NAB argues.

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EUR/USD: Draghi’s Jackson Hole Speech & Fed’s Balance Sheet Runoff Announcement Are Non-Events – BTMU

BTMU FX Strategy Research notes that the more dovish tone of the FOMC minutes will reinforce the market’s view that the Fed is likely to delay raising rates again until next year and thereby continue to weigh on the US dollar in the near-term.

“Of secondary importance, the FOMC minutes also supported the market’s current expectations that it will announce plans to begin balance sheet shrinkage at their September FOMC meeting.

We do not expect the announcement to have material impact on the US dollar  given the initial pace of roll offs will be only very gradual,” BTMU argues.

Same true, according to BTMU, to ECB President Draghi’s upcoming speech at Jackson Hole  especially after yesterday’s report from Reuters that he will not deliver a fresh policy message at Jackson Hole,  and wants to hold off on debate until the autumn when the ECB is expected to outline plans to begin tapering QE from next year.

“Overall, we see the report as neutral for the euro although it tips the balance of risks a little more onto the dovish side ahead of the speech. President Draghi will reportedly focus his speech on fostering a dynamic global economy which could offer some scope to send a cautious signal that central banks like the ECB need to be very careful when reversing current loose policy,” BTMU adds.

EUR/USD: Current Range Only A ‘Stepping Stone’ For A Move To 1.20 & Beyond – SocGen

Societe Generale Cross Asset Strategy Research notes that the  FOMC Minutes  were long, but the underlying message seemed to be1)  divided on rate hikes in a low-inflation/low unemployment world and  2)  pretty committed to push ahead with balance sheet reduction.

“The main FX story is the choppy dollar consolidation. The Minutes do nothing to move the debate. If there’s an underlying story it’s that where the dollar goes from here, it’s less about the US and Fed policy than about what other central bankers do.

 The current EUR/USD range is only a stepping stone for a move to 1.20 and beyond if 1)  the range-trading allows positions to become more balanced  and 2)  the ECB demonstrates that it is still on a journey to policy normalization, however slow,” SocGen argues.

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