Having fallen nearly 8% between late September and mid-November, it is no surprise to see EUR/USD undergoing some consolidation. Be it European political risk, weak activity, the threat of trade wars or energy prices creeping higher (EU gas inventories are starting to come under pressure) there are many reasons to be underweight in the euro, ING’s FX analysts Chris Turner notes.
EUR/USD to be capped around the 1.0550 area
“We do have ECB President Christine Lagarde speaking at the EU parliament at 1430CET. We doubt she will shed much light on whether the ECB will cut rates by 25bp or 50bp on 12 December, although 25bp looks much more likely at the moment.”
“Our bias would be for EUR/USD to be capped around the 1.0550 area and it would be no surprise if EUR/USD dropped back towards 1.0400 over the coming days – unless Friday’s US NFP data dramatically disappoints consensus of +200/220k.”
“Elsewhere, we have Bank of England Governor Andrew Bailey speaking at a Financial Times event at 1000CET today. He occasionally errs into dovish territory but probably does not have the ammunition to do that today. Still, there are downside risks to GBP/USD from the speech – perhaps taking the pair to 1.2590/2620 on the day.”
