EUR/USD jump might remain short-lived – BTMU

FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, views that any Greece deal might push EUR/USD higher, but the potential Fed hike and US yield story will likely keep the pair weaker on the longer run.

Key Quotes

“While it is understandable to see the EUR/USD track higher on the back of a potential resolution to the crisis in Greece, we do not expect this to be a catalyst for any meaningful or sustained rally in EUR/USD.”

“EUR speculative short positions were first established in May of last year, fuelled by the speculation of ECB easing. The ECB duly followed with two deposit rate cuts and QE. Greece has only gradually become a focus in the market over the past three months after Syriza’s election victory (in January) and the realisation that Syriza may prove as difficult to deal with as first feared.”

“So yes, a break further higher in EUR/USD on a Greece resolution is likely but a couple of big figures is all we would give EUR/USD on positive Greece news.”

“The bigger story is the Fed and US yields and there’s plenty of dollar upside scope on that going forward.”