Euro: Fed uncertainty limits gains against US Dollar – ING
Chris Turner at ING argues EUR/USD should be performing better given solid Eurozone data, lower Oil prices and Japanese US Dollar (USD) selling, but notes possible US activity in EUR/JPY as a short-term drag.
ING analyst Chris Turner contends that the EUR/USD should be outperforming current levels, given favorable Eurozone data, decreasing Oil prices, and heightened Japanese USD selling. However, Turner acknowledges potential short-term resistance from US activity in EUR/JPY. The Federal Reserve's September decision and forthcoming US economic data will determine whether the EUR/USD can breach the 1.1615/20 resistance or retreat below the 1.15 level.
Turner suggests that the US Treasury's limited holdings of euro-denominated FX reserves and Tokyo's significant FX activity may play a role in the EUR/USD's performance, as the US could be selling EUR/JPY to justify its dollar selling. The key driver of the EUR/USD trend, however, is the Fed's September decision, which remains uncertain.
Meanwhile, GBP/USD demonstrates renewed strength, nearing the daily highs around 1.3470 despite geopolitical tensions and escalating oil prices.
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