EUR/USD: Midway through an entirely understandable correction - Westpac

EUR/USD midway through an entirely understandable correction, one of several that have punctuated the otherwise steady uptrend in place all year, according to Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“Despite extreme positions persistently outperforming EU data suggests further moves higher EUR/USD, especially with debt ceiling and shutdown risks in late Sep.”

“EUR likely trades in similar fashion as the USD going into the 2013 Fed taper. Back then the USD traded consistently on the front foot after Bernanke signalled tapering prospects and only corrected lower after the Dec ‘13 formal announcement (e.g. buy the rumour sell the fact). ECB on course to preannounce taper 7 Sep and formally deliver 26 Oct.”

“Recent CHF softening should continue, despite lifts in CPI and PMI, amid better EZ data and multi-year lows in a range of global risk premia indicators.”