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Forex Flash: EUR/USD potential decline to 1.300 medium term – Rabobank

The single currency is recovering ground lost after ECB’s President M.Draghi talked down the recent appreciation of the cross, dragging it to the area around 1.3350 after February 1 tops above 1.3700

According to Jane Foley, Senior Currency Strategist at Rabobank, Spain, Italy and even Cyprus have the potential to interfere in any upside attempt of the euro in the near and medium term.

“That said, the pace of January’s rise in EUR/USD was faster than we had expected and left us concerned that the degree of investor optimism was out of kilter with economic developments. Over the next few weeks we expect a consolidative tone to be maintained in EUR/USD. However, news from Spain, Italy or even Cyprus has the capacity to create a deeper correction in EUR/USD over the coming months meaning that there is a good chance that EUR/USD1.300 will be seen again before the EUR musters up the energy to launch itself at 1.400”, concluded the expert.

European markets up, reports of joint statement on currency war soon

The German DAX 30 (+0.17%), the French CAC 40 (+0.76%), the Italian FTSE MIB (-0.20%) and the Spanish IBEX 35 (-0.35%). Volumes are low, the economic calendar is basically empty and not much headlines to trade on.
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Forex: EUR/USD stronger, tries to extend above 1.3400

After stale trading during the Asian shift, as those markets are closed for New Year, the EUR/USD first went for a retest of the 50% retracement of the move higher seen this year, to as low as 1.3358. But after that, attempts at breaching above the 1.3400 psychological level have been seen, particularly in the most recent hour.
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