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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - Rhetoric to talk the EUR lower could intensify in the coming weeks, according to Strategists at HSBC.

Key Quotes

"Actions speak louder than words, and any LTRO or rate cut would have a profound impact on market interest rate expectations. The EUR has shown a rising correlation to expectations for where interest rates will be in the medium term."

"We believe that the EUR is firmly in the grouping of currencies being driven by carry. Successfully manoeuvring rate expectations lower would see the EUR fall in similar fashion."

"The Real Effective Exchange Rate (REER) of the EUR has appreciated by an unhelpful 9% in the last year. This is the potential Achilles heel, and will demand a policy response. This could come in many forms, be it rhetoric, a rate cut or renewed liquidity injections by the ECB, and stifling the EUR’s rise will be a key part of the strategy."
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