6 Feb 2014
Flash: EUR/USD lower on ECB meet? - Danske Bank
FXStreet (Barcelona) - Sverre Holbek, Senior Analyst at Danske Bank notes that the centre of attention will be the ECB meet and EUR/USD could be positioned for a move lower..
Key Quotes
“A February rate cut in response to recent soft inflation figures would be a strong signal to the short end of the EUR money-market curve (to which the euro remains highly sensitive) that the ECB is ready to react swiftly and may be moving closer to scrapping the aversion against negative rates (though we do not expect to see a negative deposit rate already this week).”
“Also, speculative positioning in itself suggests potential for a move lower in EUR/USD in the near term. We would thus not be surprised to see EUR/USD test the strong support level at 1.3390 on an ECB refi cut today.”
Key Quotes
“A February rate cut in response to recent soft inflation figures would be a strong signal to the short end of the EUR money-market curve (to which the euro remains highly sensitive) that the ECB is ready to react swiftly and may be moving closer to scrapping the aversion against negative rates (though we do not expect to see a negative deposit rate already this week).”
“Also, speculative positioning in itself suggests potential for a move lower in EUR/USD in the near term. We would thus not be surprised to see EUR/USD test the strong support level at 1.3390 on an ECB refi cut today.”