Dragged down by marked divergence

26 November, 2018

Analysts at Danske Bank explain that the EUR/USD has been dragged down by the marked divergence in growth momentum still visible in PMIs on Friday and cyclical dispersion is set to remain a key factor near term.

“A range of prominent ECB speakers today including Draghi in front of the EU parliament could set the scene for ECBs next draw and provide EUR with a hint of whether now is the time to buy into ‘rates hikes are coming’ in the euro zone. That said, we tend to think it is too early for the single currency to get too excited about this given the meagre inflation outlook.”

“Besides inflation figures later in the week, USD will look to both the Fed minutes – which we think could ‘disappoint’ recent softness in the pricing of hikes - and the 1 December Xi Jinping-Trump meeting – where a possible ceasefire could be seen.”

“Overall, EUR/USD is set to stay under pressure but in a range around 1.13, with a possible kneejerk reaction higher if the market smells a trade deal.”


Source   Presented by HYCM
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