Forex Daily EURUSD: Higher three month forecast We shift our three month forecast for EURUSD up from 1.30 to 1.34. The six and twelve month forecasts stay unchanged at 1.28 and 1.24, respectively. Our reason to be bullish on the USD stay unchanged: our view that the improvements on the US labor and real estate markets will grant a continuation of the tapering and the first rate hikes in Q2 or Q3 2015. In recent months the economy and the data flow was disturbed by severe weather conditions in the US, while Europe enjoyed an unusually mild winter. Asymmetric data surprises helped EURUSD to rise to the resistance at 1.38. The staff projection of the ECB last week made things, however, worse. The ECB presented the view that inflation will rise towards 1.7% by the end of 2016 under the assumption that EURUSD stays unchanged at 1.36. According to our own calculations we think the ECB will run into a deflationary trap if EURUSD stays at current levels or rises further. ■ No changes to BOJs pace of QE expansion ■ GBP forecast changes ■ Swedish inflation data modestly supports SEK ■ Norges Bank Governor comments support NOK Thomas Flury strategist, UBS AG Join us now for more! bit.ly/1ewaz3M
Posted on: Wed, 12 Mar 2014 07:19:50 +0000