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11 Dec 2014
EUR/USD may see a correction – TDS
FXStreet (Barcelona) - Shaun Osborne and Martin Schwerdtfeger, FX Strategists at TD Securities, note that the EUR/USD pair may see a rebound to 1.2625/50 levels supported by - falling US yields, market and technical factors.
Key Quotes
“EURUSD is making a little more progress topside this morning, trading and holding above technical resistance in the low 1.24 area, defined by the downtrend in place since August that we highlighted yesterday. The EUR is doing a little better against the USD even as this morning’s ECB TLTRO announcement was a little disappointing and will encourage market speculation that the ECB will have to undertake additional easing steps in 2015 to boost its balance sheet in the desired manner.“
“The grind higher has a strong technical dimension to it, but there is also a sense that the market is reducing positioning—covering EUR shorts—as the holiday season nears. We continue to stress that seasonal trends suggest the USD has a tendency to soften modestly in December as well.”
“With US yields continuing to retreat, this constellation of market and technical factors seem to be opening the door to a deeper EURUSD rebound. We think gains above 1.2450 may allow for EURUSD to push up to the 1.2625/50 area in the next couple of weeks—presenting investors with a great opportunity to sell ahead of what seems more and more likely to be renewed ECB easing measures next year.“
Key Quotes
“EURUSD is making a little more progress topside this morning, trading and holding above technical resistance in the low 1.24 area, defined by the downtrend in place since August that we highlighted yesterday. The EUR is doing a little better against the USD even as this morning’s ECB TLTRO announcement was a little disappointing and will encourage market speculation that the ECB will have to undertake additional easing steps in 2015 to boost its balance sheet in the desired manner.“
“The grind higher has a strong technical dimension to it, but there is also a sense that the market is reducing positioning—covering EUR shorts—as the holiday season nears. We continue to stress that seasonal trends suggest the USD has a tendency to soften modestly in December as well.”
“With US yields continuing to retreat, this constellation of market and technical factors seem to be opening the door to a deeper EURUSD rebound. We think gains above 1.2450 may allow for EURUSD to push up to the 1.2625/50 area in the next couple of weeks—presenting investors with a great opportunity to sell ahead of what seems more and more likely to be renewed ECB easing measures next year.“