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EURO SUMMARY: Fed Easing Hopes Boost EURUSD Back Above 1.1100

EURO SUMMARY
CEEMEABulletGlobalForeign Exchange BulletsRegionMarkets
  • The ongoing uncertainty surrounding whether the Fed opts to front-load the easing cycle is weighing on the greenback Monday and the EUR’s significant weighting within the dollar index is providing a boost to the single currency. Firm price action for equities will also be supporting the 0.42% rally.
  • As such, EURUSD finds itself back above 1.11 and price action is narrowing the gap to key short-term resistance at 1.1155, the Sep 6 high. Clearance of this level would cancel a recent bearish theme and highlight scope for a stronger recovery towards 1.1202, the Aug 26 high and a bull trigger.
  • Headlines from ECB’s Kazimir noting the central bank will probably only be in a position to lower interest rates again at its final meeting of the year, indicates a relatively cautious dynamic, which may be underpinning the renewed EURUSD strength.
  • Goldman Sachs highlighted that the Governing Council has yet to pivot decisively from backwards-looking inflation to the forward-looking activity picture and appeared to set a high bar for moving at back-to-back meetings. This is in effect a high real rate policy setting despite weakening activity momentum, which tends to support the currency, according to GS.
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  • The ongoing uncertainty surrounding whether the Fed opts to front-load the easing cycle is weighing on the greenback Monday and the EUR’s significant weighting within the dollar index is providing a boost to the single currency. Firm price action for equities will also be supporting the 0.42% rally.
  • As such, EURUSD finds itself back above 1.11 and price action is narrowing the gap to key short-term resistance at 1.1155, the Sep 6 high. Clearance of this level would cancel a recent bearish theme and highlight scope for a stronger recovery towards 1.1202, the Aug 26 high and a bull trigger.
  • Headlines from ECB’s Kazimir noting the central bank will probably only be in a position to lower interest rates again at its final meeting of the year, indicates a relatively cautious dynamic, which may be underpinning the renewed EURUSD strength.
  • Goldman Sachs highlighted that the Governing Council has yet to pivot decisively from backwards-looking inflation to the forward-looking activity picture and appeared to set a high bar for moving at back-to-back meetings. This is in effect a high real rate policy setting despite weakening activity momentum, which tends to support the currency, according to GS.