Richard Franulovich of Westpac, expects US data next week to underwhelm the recovery of the economy, and hence expects EUR/USD to stabilize at current levels.
“EUR/USD trading poorly in recent sessions but the foundations for the recent leg lower – the ECB’s decision to front-load QE ahead of thinner/illiquid bond market conditions in summer – seem weak since the ECB will of course buy fewer bonds in summer as well and on balance the pace of purchases will continues to average EUR60bn per month.”
“US data next week (durable goods orders, regional PMIs and the second update of Q1 GDP) more likely than to underwhelm too.”
“In short EUR should stabilise here though we are wrong if 1.10 breaks. At 0.7140 EUR/GBP is at the lower end of its range and should bounce here. Certainly the atmospherics play to that, with core inflation skidding down to 0.8%, its lowest levels in 14 years.”
“EUR/CHF risks remain skewed lower amid ongoing Greek concerns and ever present risks of renewed geopolitical instability in Ukraine.”