Forex Flash: EUR/USD would range between 1.29-1.32 near term – Rabobank

The single currency remains locked in the area of 1.3020/40 on Tuesday, retracing ground after a failed attempt to break above 1.3080 on better-than-expected PMI data.

The recent USD strength was bolstered by the likeliness of the Fed to end its ongoing QE programme before previously anticipated, although that possibility soon faded away after recent comments by Chief B.Bernanke and Vice J.Yellen.

Jane Foley, Chief Currency Strategist at Rabobank, suggests the euro would face domestic headwinds stemming from Italy, Cyprus and Spain, while soft data in the upcoming periods should not be ruled out. “In summary despite the downside risks, on the back of the QE headwinds undermining the USD and indeed the position effect on risk appetite that the current huge level of liquidity is likely to have we are reluctant to call EUR/USD significantly lower in the coming months”, she remarks. Foley also adds, “On balance, over the next few weeks we anticipate a continuation of a jittery range around the EUR/USD1.29 to 1.32 region”