Analyst says that … 1.10 is not far away
but … psychologically it would represent a fairly significant move
Shorts have been building since the start of the year against a backdrop of
- weakness in the German manufacturing sector,
- a dovish ECB
- and concerns about populism ahead of the European parliamentary elections.
There is an argument in the market that the EUR could benefit from short covering going forward as the trade war between the US and China pushes investors into more neutral ground. In our view, the Eurozone's fundamentals are currently not strong enough for investors to choose the EUR over and above the USD.
Given that worries about growth can be overlaid with concerned about low policy rates and populism, we don't see the EUR as picking up much of a safe haven bid in the coming months
via Rabo
