16 Jun 2015
EUR/USD sell on rallies – Westpac
FXStreet (Edinburgh) - Strategists at Westpac recommend selling EUR/USD on strength.
Key Quotes
“EUR continues to hold on the firmer side of expectations. At least one EUR positive in recent weeks though looks set to fade - the bund sell-off. Historical analogs (the 2003 JGB sell off-off and the 2013 US treasury taper tantrum) suggest that we have finally approached the minimum time frame for thinking about some moderation in the pace of the sell-off with yields typically stabilising after rising 100-120bp two-three months after they bottomed”.
“EUR gains on multiple crosses in recent weeks should thus begin to moderate, if not reverse. Higher yields and Greek worries should prompt a good pullback in the ZEW survey too while the FOMC is more likely than not to raise Sep Fed tightening expectations. All told the mix of event risk offers more headwinds than tailwinds for EUR. EUR/USD a sell into the 1.14-1.15 zone”.
Key Quotes
“EUR continues to hold on the firmer side of expectations. At least one EUR positive in recent weeks though looks set to fade - the bund sell-off. Historical analogs (the 2003 JGB sell off-off and the 2013 US treasury taper tantrum) suggest that we have finally approached the minimum time frame for thinking about some moderation in the pace of the sell-off with yields typically stabilising after rising 100-120bp two-three months after they bottomed”.
“EUR gains on multiple crosses in recent weeks should thus begin to moderate, if not reverse. Higher yields and Greek worries should prompt a good pullback in the ZEW survey too while the FOMC is more likely than not to raise Sep Fed tightening expectations. All told the mix of event risk offers more headwinds than tailwinds for EUR. EUR/USD a sell into the 1.14-1.15 zone”.