FXStreet (Córdoba) - EUR/USD is under pressure on two fronts: from speculation about a turnaround in Fed policy whilst the ECB is becoming increasingly expansionary, according to Lutz Karpowitz, analyst at Commerzbank. The fact that the Fed and ECB are moving in opposite directions is putting increasing pressure on EUR/USD and this trend is likely to continue over the coming months, the analyst said.

Key Quotes

“EUR/USD is under pressure on two fronts. Onthe one hand USD is benefitting from the
US central bank’s increasingly apparent interest rate turnaround; on the other hand the ECB is becoming increasingly expansionary”.

“The fact that the Fed and ECB are moving in opposite directions is putting increasing pressure on EUR/USD and this trend is likely to continue over the coming months”.

“It would be ridiculous to claim that EUR/USD is nose-diving, but the cross has nonetheless been easing constantly since early July. As a result it is reflecting the general sentiment on the FX market quite well, as this is partially due to the general strength of the US dollar, which is no doubt fundamentally justified. At present markets are pricing in a rate rise for late July 2015, whereas we expect this to happen a little earlier. This is likely to support the greenback”.

“EUR weakness is as responsible for the fall in EUR/USD as USD strength. The ECB’s increasingly expansionary monetary policy is clearly putting mounting pressure on the euro. This is not likely to change any time soon either, as the ECB has little opportunity to pursue a more restrictive monetary policy”.

“As a result EUR/USD is likely to principally remain under pressure even if the fall will not necessarily gather momentum”.

Related Articles
  1. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  2. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  3. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  4. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  5. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  6. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  7. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
  8. Forex Education

    The Top Uses For P2P Currency Exchange

    Peer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
  9. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  10. Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.

You May Also Like

Trading Center