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21 Feb 2014
Flash: EUR/USD: The tide is turning - Commerzbank
FXStreet (Córdoba) - According to Thu Lan Nguyen, analyst at Commerzbank, encouraging economic data from the euro area and signs of a weakening US economy have recently buoyed EUR/USD. But the analyst notes the tide will probably turn again in the week ahead as inflation data for the euro area should remind the market of the risk of further expansionary ECB measures and weigh on the euro.
Key Quotes
"The EUR has profited in recent weeks from encouraging economic data for the euro area. The market thus clearly demonstrated where its priority now lies. After all, the government crisis in Italy left the EUR almost unaffected. It is becoming clear once again that the ECB's promise to buy unlimited amounts of government bonds of a crisis country if necessary is bearing fruit".
"On the other hand, US data continued to disappoint as they did in the previous weeks, fuelling the USD weakness seen since the start of the month. Against this backdrop EUR/USD has climbed to levels just over 1.3750 in the last few days".
"But now the tide will probably turn again. Next week's inflation data for the euro area should remind the market of the risk of further expansionary ECB measures. This will probably take the wind out of the euro's sails. Yesterday's decline in the purchasing managers' index for the manufacturing sector in the euro area already dampened the good EUR sentiment".
Key Quotes
"The EUR has profited in recent weeks from encouraging economic data for the euro area. The market thus clearly demonstrated where its priority now lies. After all, the government crisis in Italy left the EUR almost unaffected. It is becoming clear once again that the ECB's promise to buy unlimited amounts of government bonds of a crisis country if necessary is bearing fruit".
"On the other hand, US data continued to disappoint as they did in the previous weeks, fuelling the USD weakness seen since the start of the month. Against this backdrop EUR/USD has climbed to levels just over 1.3750 in the last few days".
"But now the tide will probably turn again. Next week's inflation data for the euro area should remind the market of the risk of further expansionary ECB measures. This will probably take the wind out of the euro's sails. Yesterday's decline in the purchasing managers' index for the manufacturing sector in the euro area already dampened the good EUR sentiment".