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23 Jun 2015
EUR could resume its decline once a deal is sealed – Rabobank
FXStreet (Edinburgh) - In the view of Jane Foley, Senior Currency Strategist at Rabobank, the downside is expected to return to the EUR in the medium term.
Key Quotes
“The soft tone of the EUR since the start of the week and its correlation with other risk assets adds weight to our view that the EUR has been behaving as quasi-safe haven on the back of the fact that the Eurozone can boast a large current account surplus”.
“It follows that once risk appetite is restored that investors will again take advantage of the low interest rates that are prevalent through much of the Eurozone and use the EUR to fund riskier trades in higher yielding assets”.
“The removal of the Greek risk factors thus raises the likelihood that EUR/USD will once again be dominated by the fundamental factors which led EUR/USD lower at the start of this year”.
“While we do see scope for EUR/USD to fall during the second half of the year, we would also warns that the fundamental backdrop is not quite the same as it was in Q1”.
Key Quotes
“The soft tone of the EUR since the start of the week and its correlation with other risk assets adds weight to our view that the EUR has been behaving as quasi-safe haven on the back of the fact that the Eurozone can boast a large current account surplus”.
“It follows that once risk appetite is restored that investors will again take advantage of the low interest rates that are prevalent through much of the Eurozone and use the EUR to fund riskier trades in higher yielding assets”.
“The removal of the Greek risk factors thus raises the likelihood that EUR/USD will once again be dominated by the fundamental factors which led EUR/USD lower at the start of this year”.
“While we do see scope for EUR/USD to fall during the second half of the year, we would also warns that the fundamental backdrop is not quite the same as it was in Q1”.