Morgan Stanley comment from overnight:
- Say that after the NFP data on Friday there is a greater risk of a more significant correction for the US dollar
- The impact on the USD, they say though, will depend on how the Federal Reserve interprets the data
- MS say EUR/USD is likely to be where the correction is emphasised the most:
EURUSD has been testing the upper end of the recent range at 1.1050, and a move above here would open the way for gains towards 1.1300 and then 1.1540, which represent the 38.2% and 50% retracement levels of the decline seen since the 1.2570 December high.
We have switched our near-term trading strategy to looking to establish tactical EURUSD long positions
MS' trading recommendations:
MS are not ignoring the risks to the EUR, though:
- However, the risks for EUR are not subsiding, if fact quite the opposite
- Greece remains in a precarious position, with the next debt repayment to the IMF due on April 9
- While a relatively small payment of €450m, the lack of funding sources could still mean that this will be a testing time
- Although Greece has committed to make this payment in recent statements, there still appears to have been little progress with regards the negotiations between Greece and the EU on broader reform measures needed to release bailout funds
- The Euro Working group is set to meet on Wednesday to discuss Greece further. Greek PM Tsipras has also brought forward his visit to Russia to meet Putin, which will now take place on Wednesday.
