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12 Jul 2013
Flash: EUR/USD holds bearish bias - BTMU
FXstreet.com (London) - Bank of Tokyo Mitsubishi UFJ analysts see EUR/USD holding a bearish bias and see spot ranging between 1.2850 and 1.3150.
They begin by commenting that they expect that the initial spike higher for the euro against the US dollar will gradually reverse in the week ahead. Further they feel that the Fed still appears on course to begin tapering QE before year-end perhaps as early as the September FOMC meeting which should support the US dollar. They add that the 10-year yield spread between the US and German government bonds has widened out towards 100 basis points, and the last time the yield spread was consistently that wide was between mid-2005 and mid-2006 when EUR/USD was trading at around the 1.2000-level.
They continue to add that Fed Chairman Bernanke’s semi-annual monetary policy reports to both the House and Senate will be now be even more closely scrutinized to assess the potential timing of QE tapering. They feel that the ECB’s commitment that key rates will remain at present or lower levels for an extended period is likely to continue to weigh upon the euro. They finish by writing, “The commitment and easing bias will help to limit euro upside potential from improving euro-zone cyclical momentum. There are no major market moving economic data releases or events scheduled from the euro-zone in the week ahead.”
They begin by commenting that they expect that the initial spike higher for the euro against the US dollar will gradually reverse in the week ahead. Further they feel that the Fed still appears on course to begin tapering QE before year-end perhaps as early as the September FOMC meeting which should support the US dollar. They add that the 10-year yield spread between the US and German government bonds has widened out towards 100 basis points, and the last time the yield spread was consistently that wide was between mid-2005 and mid-2006 when EUR/USD was trading at around the 1.2000-level.
They continue to add that Fed Chairman Bernanke’s semi-annual monetary policy reports to both the House and Senate will be now be even more closely scrutinized to assess the potential timing of QE tapering. They feel that the ECB’s commitment that key rates will remain at present or lower levels for an extended period is likely to continue to weigh upon the euro. They finish by writing, “The commitment and easing bias will help to limit euro upside potential from improving euro-zone cyclical momentum. There are no major market moving economic data releases or events scheduled from the euro-zone in the week ahead.”