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6 Mar 2014
Flash: EUR/USD potential downside ahead - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, sees the EUR/USD expensive in the near-term.
Key Quotes
"The focus in the European trading session will be upon the outcome from the ECB’s monetary policy meeting. The gradual improvement in the euro-zone growth outlook combined with the recent higher than expected euro-zone core inflation reading for February and more stable money market conditions reduce the immediate need for further ECB monetary easing today."
"The main unknown which will also affect today’s ECB policy decision is the updated ECB staff forecasts which will include the CPI estimate for 2016. It will likely require the CPI reading for 2016 to be still well below the ECB’s inflation target to prompt further monetary easing today."
"If the ECB refrains from further monetary easing it is likely that the euro will continue to remain stronger for longer. However our short valuation model is already signalling that the euro already appears expensive in the near-term which may leave it more sensitive to a dovish ECB surprise today. The pound is expected to continue to strengthen following the release yesterday of the stronger than expected UK services PMI survey which remained consistent with robust growth in Q1."
Key Quotes
"The focus in the European trading session will be upon the outcome from the ECB’s monetary policy meeting. The gradual improvement in the euro-zone growth outlook combined with the recent higher than expected euro-zone core inflation reading for February and more stable money market conditions reduce the immediate need for further ECB monetary easing today."
"The main unknown which will also affect today’s ECB policy decision is the updated ECB staff forecasts which will include the CPI estimate for 2016. It will likely require the CPI reading for 2016 to be still well below the ECB’s inflation target to prompt further monetary easing today."
"If the ECB refrains from further monetary easing it is likely that the euro will continue to remain stronger for longer. However our short valuation model is already signalling that the euro already appears expensive in the near-term which may leave it more sensitive to a dovish ECB surprise today. The pound is expected to continue to strengthen following the release yesterday of the stronger than expected UK services PMI survey which remained consistent with robust growth in Q1."