FXStreet (Edinburgh) - Derek Halpenny, European Head of GMR at BTMU, expects a stronger dollar to be the main catalyst of further downside in the pair.
Key Quotes
“Our view on further EUR/USD declines is not really based on the action from the ECB. With the yield curve pointing to the action being priced, the potential for surprise on 3rd December is now low”.
“Can we say the same about the FOMC on 16th December? Not quite, we would argue. We are currently priced at about 65/70% and given the FOMC has not hiked in nearly a decade and given the delay in September, there remains plenty of scepticism about the FOMC acting”.
“Certainly though even the US markets is considerably better priced than a few weeks ago and hence some adjustment (higher) in the pricing to 2016 rate hike expectations may now be required in order to get to our parity target in 2016”.
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