EUR/USD: Limited downside potential – Commerzbank

By FXStreet The EUR has recently depreciated slightly versus the USD, and with a view to next week’s ECB meeting, the EUR weakness looks set to continue for now, said Thu Lan Nguyen, analyst at commerzbank. But the downside potential in EUR/USD is limited, as uncertainty regarding the further course of action by the ECB and the Fed remains high, the analyst said.

Key Quotes

“EUR/USD has broken out of its narrow trading range of the last two weeks to the downside. For one thing, this is due to a general USD rally after the US currency had traded much weaker recently on the back of the more dovish Fed. But an extremely cautious Fed approach has now been priced in sufficiently. Moreover, several FOMC members have struck a somewhat more optimistic tone of late. For example, Philadelphia Fed President Patrick Harker and San Francisco Fed President John Williams see a real possibility of up to three rate moves in the course of this year.”

“But the EUR has also become weaker recently. And this weakness looks set to continue with a view to the ECB meeting in the coming week. Against the backdrop of the disappointing development of inflation expectations in the euro zone, …read more

Source:: FX Street