Things Don't seem to be Looking up for the EUR/USD - It will be a Tough week for the EURO - Look To go SHORT on any Rallys.
FXstreet.com (Córdoba) - The BBH analyst team looks for the euro to
continue to trend lower in the coming week. "We often find that the euro
is well-correlated with the US-German 2-year interest rate
differential", they say. "The premium the US offers over Germany is
hovering around 28 bp, best since late 2007. It has also increased
nearly 10 bp since late June, as German yields have fallen sharply due
to safe haven demand".
"The focus remains on Spain and Italy. In
exchange for additional time to reach its deficit targets, the Spanish
government agreed to new austerity measures, which were announced
earlier this week", they explain. "Spain's 10-year yield has nonetheless
retraced nearly 50% of the move since June 28/29 Summit and the
negative feedback of a deeper recession will likely feed into the next
round of cuts".
"Spain will issue bills on Tuesday and bonds on
Thursday, which will be important watch to gauge the market's demand for
Spanish debt. Lastly, ZEW surveys out July 17 are likely to point to
continued euro zone weakness", they add.
According to BBH key
levels for EUR/USD on the upside are seen near $1.2340, $1.2460, says
BBH while supports come near $1.2150, $1.1880.
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