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Barclays: EUR/USD Passes Tipping Point – eFXnews

FXStreet (Barcelona) - The eFXnews Team notes Barclays view that EUR has a greater downside ahead at longer horizons as it has passed the tipping point.

Key Quotes

“One of the key reasons we had to expect a rapid decline was our belief that markets were near a tipping point where a broad consensus of participants would see EUR depreciation as the overwhelmingly likely outcome and, given the European Central Bank’s (ECB) introduction of negative interest rates, would have an incentive to hedge EUR exposures en masse.”

“Indeed, while we maintain our forecasts for a steep path of EUR descent in the year ahead, the euro area’s difficult economic situation and increased signs of market unease with the euro area outlook suggest that the distribution of risks now may be even more skewed towards lower EUR exchange rates.”

“The three most likely scenarios for the EUR all involve much greater downside, for at least the next 6-12 months, and in a couple less likely scenarios, a resurgence of the EUR, particularly if it were significant, would signal an unstable equilibrium, in our view, that would only lead to greater EUR downside at longer horizons.”

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