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20 May 2015
EUR/USD: short-term picture remains constructive for dollar – KBC
FXStreet (Barcelona) - The KBC Bank Research Team, mentions that the dollar needs further confirmation in terms of data to enjoy a sustained rebound versus the euro, although the short-term picture favours the downside in EUR/USD.
Key Quotes
“We maintain a cautiously positive bias on the dollar longer term, but started this week with a neutral bias for EUR/USD and for the dollar in general as we didn’t see a trigger for a sustained improvement in USD sentiment.”
“Yesterday, the news flow was in the first place ‘euro negative’, but for the first time since quite a while, US data were USD supportive too. This helped the recent bottoming out process of the USD. At the same time, interest rate differentials moved again in favour of the dollar. So, the short-term picture looks more USD constructive.”
“Of late, the bond sell-off was an important driver for currency trading. The rise in core bond yields supported the euro more than the dollar. There are tentative signs that this pattern is changing. If the decline of the Bund stalls, the euro rally could peter out too.”
“EUR/USD 1.1534 (early February top) is the next important resistance for EUR/USD. A sustained break beyond this level would be important and indicate further USD weakness. This is not our preferred scenario. However, a sustained further rebound of the dollar needs more confirmation that the UQS Q1 dip was indeed temporary in nature.”
Key Quotes
“We maintain a cautiously positive bias on the dollar longer term, but started this week with a neutral bias for EUR/USD and for the dollar in general as we didn’t see a trigger for a sustained improvement in USD sentiment.”
“Yesterday, the news flow was in the first place ‘euro negative’, but for the first time since quite a while, US data were USD supportive too. This helped the recent bottoming out process of the USD. At the same time, interest rate differentials moved again in favour of the dollar. So, the short-term picture looks more USD constructive.”
“Of late, the bond sell-off was an important driver for currency trading. The rise in core bond yields supported the euro more than the dollar. There are tentative signs that this pattern is changing. If the decline of the Bund stalls, the euro rally could peter out too.”
“EUR/USD 1.1534 (early February top) is the next important resistance for EUR/USD. A sustained break beyond this level would be important and indicate further USD weakness. This is not our preferred scenario. However, a sustained further rebound of the dollar needs more confirmation that the UQS Q1 dip was indeed temporary in nature.”