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Forex Flash: EUR/USD holds a neutral bias – BTMU

FXstreet.com (Barcelona) - Bank of Tokyo Mitsubishi UFJ analysts are neutral for the week ahead and see spot ranging between 1.2950 and 1.3250.

They begin by noting that the euro continues to remain relatively stable in the near-term with EUR/USD
lacking direction. They do not expect that dynamic to change in the week ahead with no clear fresh catalyst on the horizon. Further, they add that the euro appears well supported against the US dollar above the 1.30-level where its 200-day moving average is located. They write, “Even ECB President Draghi’s signal that the ECB is open to lowering its deposit rate into negative territory has had only a limited negative impact upon the euro.”

They see that the euro is deriving support from tightening liquidity conditions in the euro-zone as banks continue to repay three-year LTRO funds, although the pace of repayment has eased in recent weeks. Further, they note that the euro is also deriving support from the ongoing return of investor confidence in euro-zone assets with Portugal successfully issuing a 10-year bond over the past week. Looking ahead, they see the main focus in Europe will be upon the euro-zone and EU finance ministers meetings. They write. “Euro-zone finance ministers are expected to ratify providing the first EUR3.0 tranche of financing to Cyprus and the next two tranches of financial support to Greece totaling EUR7.4 billion.”

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