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Forex Flash: EUR/USD looks neutral ahead - BTMU

FXstreet.com (Barcelona) - Bank of Tokyo Mitsubishi UFJ analysts believe that EUR/USD looks neutral for the week ahead and they see spot moving between 1.2650 and 1.3050.

They begin by noting that the Euro is attempting to gradually stabilise in the near term with EUR/USD trading close to its average level over the past year. They see that the Euro remains under downward pressure in the near term driven by both uncertainty relating to developments in Cyprus and Italy, and building speculation that the ECB may ease monetary policy further.

They comment that Draghi displayed a more dovish tone at today´s monetary policy meeting, acknowledging that their projected euro-zone economic recovery in the second half of 2013 is subject to downside risk. President Draghi also acknowledged that euro-zone inflation pressures continue to ease falling below their target although risks are still seen as broadly balanced signaling that a rate cut does not appear imminent yet. So far evidence of broader contagion from the bail in for Cyprus has proved limited helping to dampen euro downside momentum in the near-term. They finish by writing, “The BoJ’s policy announcement will further expand global liquidity which may support yield seeking flows into peripheral government debt helping to support the euro.”

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