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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - After the clear signal from the Fed that intends to taper QE soon, which resulted in a sustained $/G10 sell-off, according to Nomura FX Strategist Jens Nordvig, the flow story has potential to be self-sustaining in the current phase.

Nordvig notes that "given that the catalyst is real (higher global real rates and higher volatility) and given the size of inflows since the summer of 2012", the broad-based USD strength can still enjoy some strong follow-up.

Nordvig thinks "this catch-up process of USD/G10 following USD/EM is starting now, given the clarity of the signal from the Fed", and any upbeat US data surprises may only strengthen the conviction of the market to buy further USD.

Nordvig concludes: "USD/G10 is still lagging versus rate spreads, although it matters greatly which part of the curve you look at. Hence, it may be crucial to watch for direction of short rates in crosses such as GBP/USD, EUR/USD to call a clearer turn there."
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