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    EUR may well eventually test the important 1.05 lows - Westpac Sandeep Kanihama

    Research Team at Westpac, suggests that yield spreads may be trending in EUR’s favour as Treasury yields plunge to new all-time lows but the post-Brexit aftershocks (i.e. panic withdrawals from UK property funds) and the hit to the UK and Eurozone real economies has barely started.Key Quotes“EUR likely to trade on the backfoot into the 21 July ECB meeting and beyond, the ECB likely to announce a shift purchases away from the capital key, alleviating the Bank’s shortage issues, and may well pre-announce plans to extend QE past its March 2017 end date.Late summer /early Autumn unlikely to be any less forgiving for EUR, as political risks move front and center amid Italy’s referendum on Senate reforms in Oct 2016. EUR’s current account surplus will continue to stymie the bears, as it has done so many times in recent years when the region has faced an existential crisis, but EUR nevertheless still likely trades sustainably sub-1.10 H2 2017 and may well eventually test the important 1.05 lows.Technical: 1.0913 very much the low for now. However, 1.1220/30 should cap, this was a key level earlier in 2016 and coincides with the 20wk MA and 100dma.”

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