RBS says EUR/USD goes lower multi-month but in a choppy range over the next few weeks
RBS thinks that there will be more EUR/USD chops in the near-term post the Greek deal
"The last minute agreement with Greece ought, in theory, play EUR/USD negative by allowing negative front-end rate spreads to be a bigger FX driver again. Also EUR negative, we believe, is the renewed fall in oil. For two to three months, markets have romanced the Euro area 'reflation' trade," RBS argues.
"But focus may soon fall again on how ECB QE as announced, so isn't enough to get Euro inflation back to ECB target. Against that, US front end rates rally hard (yields lower) as markets price a lower probability of a September rate rise," RBS adds.
"Conclusion: EUR/USD goes lower multi-month but in a choppy range over the next few weeks"
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