EUR/USD: Where next after escaping the abyss? Two opinions

EUR/USD fell to the lowest in 7 weeks but recovered quite quickly, remaining in the middle of the range. What’s next? The ECB is set to make some noise. Here are the views from two banks.

Here is their view, courtesy of eFXnews:

EUR/USD: Reflation Trade Still Intact But Risks Of A Deeper Correction Growing – TD

TD Research discusses EUR/USD outlook, and notes that an important theme that should amplify the drawdown in the G10 is the fact that Europe has lost some growth mojo.

“The past year the market has been tripping over itself to upgrade growth views on the major European economies. Indeed, most of the major European currencies have scored quite well on growth revisions (BBG) relative to the rest of the G10 (and the US) over the past year…

We are not ready to call the end of the European reflation trade but the signals of these high-frequency growth dynamics underscore the immediate risks of a deeper correction in the EUR,” TD argues.

TD maintains the view of looking to buy EUR/USD on any pullbacks towards 1.21 and likes buying into EUR/CAD dips.

EUR/USD: Any Weakness Early Next Week A Multi-Quarter Buying Opportunity – ING

ING Research discusses EUR/USD outlook into the political risks on the weekend and maintains a buy on dips strategy.

“Investors will also recall how the EUR reacted after French political risk was overcome last April/May.

Our preference is to look for any EUR weakness early next week as a multi-quarter EUR buying opportunity.

Today, however, EUR/JPY to 128.85 looks the story,” ING argues.

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