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Flash: EUR, year-end squeeze a growing risk - TDS

FXstreet.com (London) - A research team at TD Securities said the EUR might have found a modest bid on the back of news that Germany finally has a government but the void since the September election has hardly been a factor in the past couple of months so we doubt the news was that significant for investors.

Key Quotes:

“Moreover, chatter of further ECB easing steps has not weighed on the EUR at all today. While we remain broadly bullish on the USD outlook over 2014, the risk of a short-term squeeze higher in EUR/USD that we have highlighted remains alive”.

“Since 1999, December has been one of the better months of the year for EUR/USD, delivering a near 2.5% average gain. Even when the outsize rally in late 2008 is removed, average gains are still nearly 2%”.

“With EUR/USD through the November 20 high (date of the negative depo rate story), the risk of further, near-term EUR gains is rising”.