EUR/USD is on the back foot, still trying to recapture 1.25 and certainly giving a fight. Can it recover or will Draghi hit it when it’s down?
The team at BNP Paribas take the latter approach, explain and provide a target:
Here is their view, courtesy of eFXnews:
Following the BoJ surprise on Friday, which eased monetary policy further, BNP Paribas think a similar aggressive action is warranted in the eurozone.
“Our economists think the ECB will be next. We now expect a significant increase in asset purchases from December, with this week’s meeting likely to see a strong signal to that effect. Success in reviving inflation expectations would help move real rate differentials further against the EUR and should see a reacceleration in EUR weakness,” BNPP projects.
“Policy divergence has been and will likely remain a key theme as we head into the final months of 2014…US data has remained solid enough to support our expectation for a tightening by the middle of next year,” BNPP adds.
In line with this view, BNPP sees scope for the EURUSD to echo the sharp move we saw in USDJPY this week, and has entered a short EUR/USD position on Friday from 1.2520, targeting a move down to 1.18.
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