EUR/USD: keep buying the dips – TDS

Strategists at TD Securities remain bullish on the pair in the longer run, suggesting that occasional dips are buying opportunities.

Key Quotes

“We’re taking the ECB’s word at face value, and have pushed back the first depo rate hike to 19Q2, “well past” the horizon of QE (which we look to end in Dec 2018), and after Brexit occurs. We look for tapering to be a slow process, as the ECB needs to ensure a self-sustained uptrend in inflation before it’s comfortable in taking its foot off the gas. Strong growth leaves the ECB reasonably confident that this turn higher will come”.

“The trend is your friend. We remain medium-term bulls but grow slightly concerned that momentum has overshot too much too soon on the upside, a sentiment reflected by GC in the latest ECB minutes. Nonetheless, we look for opportunities to accumulate on a dip as growth remains solid and the broader balance of payments continues to shift in favor of a structurally higher EUR as part of a global portfolio reallocation shift”.