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Forex Flash: USD is a 'heads I win, tails you lose' case; Rally to continue short term - HSBC

Since the 16-month high of 1.3710 reached February 1st, the EUR/USD has lost 800 pips to today's low of 1.2910. The pair turned negative on the YTD chart and currently it is trading 1.66% down on 2013.

With the pair below the 1.3000 mark the HSBC expects the USD rally "to continue in the short term." According to the bank, "there appears to be an asymmetric bias where both strong positive and negative data could cause the USD to strengthen."

Heat Map euro dollar

HSBC states that the current situation in the USD "seems, for now, to be a case of: heads I win, tails you lose." as they believe "that standout positive economic releases could lead the market to reassess the potential timing of a change in Fed policy, which would have a strong positive USD impact." Keep in mind that the FOMC will announce its policy and rate decision on March 20th.

However, "while tactically we [HSBC] see this type of market reaction, any short term rally in the USD is unlikely to
be sustained." The bank's forecast is the EUR/USD March ending march at 1.30. The 3-month price at 1.296 and the 1 year forecast at 1.2710.

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