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30 Oct 2014
EUR/USD: Risk for 1.20 and beyond - RBS
FXStreet (Bali) - Greg Gibbs, FX Trading Strategist at RBS, offers his view on the market, noting that EUR/USD risks are still for a potential test of 2012 lows near 1.20 and beyond.
Key Quotes
"The Fed has kept its concerns over the disinflationary risk from a rising USD and weaker global growth expectations out of its statement. The further strength in the labour market, lower mortgage rates, higher consumer confidence and rebound in equities may have balanced these concerns."
"Against market expectations, the FOMC has continued on a steady path towards policy normalization and acknowledged that the slack in the labour market could no longer be described as significant. It clung to its ‘considerable time’ forward guidance but with even more conditions diminishing its relevance (sufficiently so that the hawkish dissents were removed)."
"We see the recovery in the US economy continuing and the Fed’s mandates close enough now that this will move the dial on Fed policy. But the needle is more likely to move on the USD than US rates. The EUR, in our view needs to retrace back to 2012 lows near 1.20 before it can more clearly stabilise and even then it may still need to fall further."
Key Quotes
"The Fed has kept its concerns over the disinflationary risk from a rising USD and weaker global growth expectations out of its statement. The further strength in the labour market, lower mortgage rates, higher consumer confidence and rebound in equities may have balanced these concerns."
"Against market expectations, the FOMC has continued on a steady path towards policy normalization and acknowledged that the slack in the labour market could no longer be described as significant. It clung to its ‘considerable time’ forward guidance but with even more conditions diminishing its relevance (sufficiently so that the hawkish dissents were removed)."
"We see the recovery in the US economy continuing and the Fed’s mandates close enough now that this will move the dial on Fed policy. But the needle is more likely to move on the USD than US rates. The EUR, in our view needs to retrace back to 2012 lows near 1.20 before it can more clearly stabilise and even then it may still need to fall further."