5 Mar 2015
EUR slides on failing to price in fundamentals – RBS
FXStreet (Barcelona) - Greg Gibbs, FX Trading Strategist at RBS, views that the sudden slide in EUR/USD from 1.40 to 1.10 area suggests that the single currency failed to price in the monetary settings against and the fundamental background.
Key Quotes
“The further slide in the EUR suggests that the monetary settings against and fundamental background are simply not fully priced in yet. We have argued that while moderately cheap, the EUR needs to move to an extreme to be consistent with the policy and economic outlook. As such, after a relatively short-lived month-long consolidation, EUR is leaking lower and is expected to remain heavy for some time.”
“The move towards parity may indeed be very fast and confusing to some as the pace of the move from 1.40 in May last year to the 1.10s has already been one of the largest and most rapid without a meaningful retracement.”
Key Quotes
“The further slide in the EUR suggests that the monetary settings against and fundamental background are simply not fully priced in yet. We have argued that while moderately cheap, the EUR needs to move to an extreme to be consistent with the policy and economic outlook. As such, after a relatively short-lived month-long consolidation, EUR is leaking lower and is expected to remain heavy for some time.”
“The move towards parity may indeed be very fast and confusing to some as the pace of the move from 1.40 in May last year to the 1.10s has already been one of the largest and most rapid without a meaningful retracement.”