TD on the euro and yen
First appeared on eFXplus on Aug 08 - 08:59 AM
TD Research likes fading USD/JPY rallies towards 108, and expects EUR/USD to retest 1.10 lows. TD is short EUR/USD as its ToTW* for this week targeting a move towards 1.1010.
Against a still feeble backdrop of global growth, the EUR remains a procyclical currency and a market voting machine on the outlook for growth. At the same time, the JPY offers many characteristics that will reinforce its role as a safe-haven. Its relative undervaluation is one factor, for sure, and yet the prospects of capital repatriation should be just as significant over the coming months. The market seems happy to accept support from central banks to ease the tensions of the past few weeks.
That should reinforce the squeeze in positioning that has aided equities over the past 24 hours, offering near-term support to USDJPY. We like fading rallies ahead of 108 while EURUSD could retest the 1.10 lows," TD adds.
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