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13 Apr 2015
Risks for USD ahead, but still remaining bearish on EUR/USD – KBC
FXStreet (Barcelona) - The KBC Bank Research Team argues that the US earnings season and the view of corporates on USD strength, and the Fed member speeches this week might pose a risk for the Dollar’s rally, and further maintain their short-term bearish view on EUR/USD, expecting a move towards 1.0463.
Key Quotes
“Later this week, the calendar heats up with the US retail sales, some regional business confidence, Michigan consumer confidence, housing data and CPI. The US earnings season starts in earnest on Tuesday, a number of Fed governors speak and the Beige book will be released.”
“In the euro area, attention goes to the ECB meeting, exceptionally on Wednesday. No new decisions are expected, but Draghi should remain dovish and insist on a full implementation of the asset purchase programme.”
“In these circumstances we have no strong view on today’s trading (no new incentives), but later this week the dollar may be favoured again if the eco data show an improvement. Furthermore, Draghi should be downbeat in his comments to avoid speculation on a premature tapering of its asset purchase programme.”
“The danger for the dollar may come from the earnings season, if many companies would complain of USD strength and from Fed governors who may try to slow the dollar’s advance.”
“The overweight of euro shorts is another factor to take into account from a tactical point of view. We confirm our long term and short term bullish outlook for the dollar (against euro). EUR/USD may go for a test lower (1.0463 and 1.0371), but given the outspoken short position of the euro we still prefer a sell-on-upticks of EUR/USD, preferable near 1.0712 or 1.1098.”
Key Quotes
“Later this week, the calendar heats up with the US retail sales, some regional business confidence, Michigan consumer confidence, housing data and CPI. The US earnings season starts in earnest on Tuesday, a number of Fed governors speak and the Beige book will be released.”
“In the euro area, attention goes to the ECB meeting, exceptionally on Wednesday. No new decisions are expected, but Draghi should remain dovish and insist on a full implementation of the asset purchase programme.”
“In these circumstances we have no strong view on today’s trading (no new incentives), but later this week the dollar may be favoured again if the eco data show an improvement. Furthermore, Draghi should be downbeat in his comments to avoid speculation on a premature tapering of its asset purchase programme.”
“The danger for the dollar may come from the earnings season, if many companies would complain of USD strength and from Fed governors who may try to slow the dollar’s advance.”
“The overweight of euro shorts is another factor to take into account from a tactical point of view. We confirm our long term and short term bullish outlook for the dollar (against euro). EUR/USD may go for a test lower (1.0463 and 1.0371), but given the outspoken short position of the euro we still prefer a sell-on-upticks of EUR/USD, preferable near 1.0712 or 1.1098.”