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27 Mar 2015
EUR/USD downtrend not over yet - RBS
FXStreet (Bali) - Greg Gibbs, FX Trading Strategist at RBS, suspects that the EUR/USD downtrend is not over yet, with the rebound viewed only as a correction from the larger dominant bear trend.
Key Quotes
"EUR has tried on a few occasions in the last week to gain a foot hold above 1.100 and appears to be failing. US economic reports have been mixed to firmer this week, and Fed comments suggest a rate hike is still likely around Q3 this year. Meanwhile EUR rates continue to drift lower."
"On multiple fronts it is costly to hold EUR balances and even if you invest in EUR assets, you can enhance the yield by funding this in another currency. As such, we should continue to see a down-trend in the EUR for some time, driving it deep into extreme historically cheap levels. The recent rebound in EUR on the back of a more dovish Fed should be viewed only as a correction in the down-trend."
Key Quotes
"EUR has tried on a few occasions in the last week to gain a foot hold above 1.100 and appears to be failing. US economic reports have been mixed to firmer this week, and Fed comments suggest a rate hike is still likely around Q3 this year. Meanwhile EUR rates continue to drift lower."
"On multiple fronts it is costly to hold EUR balances and even if you invest in EUR assets, you can enhance the yield by funding this in another currency. As such, we should continue to see a down-trend in the EUR for some time, driving it deep into extreme historically cheap levels. The recent rebound in EUR on the back of a more dovish Fed should be viewed only as a correction in the down-trend."