Forex Forecast

Range-Bound Euro Investors remain caught in two minds heading into Thursday’s EU Summit which has trapped the euro in a very tight range around 1.25, while implied-volatility continues to drop.

German CPI Due The euro continues to hug the 1.2500 level against the dollar, unable to break convincingly in either direction as investors continue to weigh the possible outcomes from the EU Summit.

Germany Downgraded The euro lacked clear direction, as investors tried to weigh the possible outcomes from the EU Summit. The initial focus was on the report prepared by European Council President Herman Van Rompuy – in collaboration with his counterparts in the European Commission, the ECB and the Eurogroup – aimed at “developing a vision […]

USDJPY Pushes Lower As expected, Japan’s lower house passed the bill proposing that the sales tax doubles from 5% to 10% by 2015. However, 57 DPJ members voted against it, which marks a major dissent inside the ruling DPJ party.

Japan Vote Imminent In Japan, the result of a parliamentary vote on increasing the sales tax is due imminently. The legislation is very likely to pass, but USDJPY could get a significant push higher if the number of “no” votes exceeds 99, as this would imply that at least 54 lawmakers from the ruling DPJ […]

Merkel Stands Firm The yen gained against its peers, as investors avoided risk on downgraded expectations for any substantive output from the EU Summit.

Summit Optimism Fades Investor optimism appears to be fading quickly ahead of the upcoming EU summit on June 28-29. The euro came under steady selling pressure throughout the European session, with Spanish and Italian bonds widening across the curve and equity markets trading in the red.

Countdown To Summit We keep our bearish view on the euro and find it hard to see how the currency can mount a sustainable rally over the coming days as investor optimism over the upcoming EU summit on June 28-29 continues to fade.

Waiting Game FX markets traded in tight ranges as investors waited for fresh guidance ahead of this week’s EU Summit. The ECB’s decision to reduce the ratings threshold for banks’ collateral and the proposal for a ‘growth package’ worth 1% of EU GDP or EUR130 bn out of the Rome meeting of the leaders of […]

Cross-winds Keep FX Quiet FX markets for confined to narrow ranges in the European session with limited newsflow on the wires. The euro came under some modest pressure with the German IFO index below expectations at 105.3 (consensus 105.9, prev 106.9).