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USD bulls taking a breather? – Rabobank

FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, notes that soft US economic data has triggered some profit-taking on USD positions, and sees the USD uptrend prone to pullbacks.

Key Quotes

“The USD index is trading noticeably below the highs made earlier in the week. That said, it has found decent support this morning.”

“Going forward we expect the USD will continue to push higher into 2015 as other developed world central banks continue to pressure their currencies lower. That said, we expect the uptrend in the USD to be subject to pullbacks.”

“In our view the Fed is unlikely to tighten policy until the end of next year. It we are correct the market will experience an adjustment of its consensus Fed view during the coming weeks or months and this suggests the potential for USD pullbacks.”

“While the path of USD appreciation may not be a straight line, we do expect that EUR/USD can move towards the 1.20 level by the end of next year. We expect USD/JPY to edge towards 120 in this time frame.”

“While the path of USD appreciation may contribute to a delay in the Fed’s policy tightening schedule, the fact that the US is way ahead of both the Eurozone and Japan in terms of both expected growth and inflation suggests that the Fed will still be tightening well before either the ECB or the Fed. “

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