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7 Feb 2013
Forex Flash: EUR could find support after ECB meeting – Danske Bank
The single currency is waiting for the ECB statement glued to the area around 1.3560/70 on Thursday, against a backdrop of prevailing risk-on mode. Market expectations for a change in the repo rate are practically zero, although the FX community expects some fireworks from Draghi’s press conference.
Chief Analyst A.Lohman-Rasmussen at Danske Bank, believes that if President Draghi somehow talks down the recent uptick in EONIA rates, that could plot against any attempt by the single currency to gather further traction. The expert added that If this case materializes, the pullback would be temporary.
“In our view the market is far too optimistic that Draghi will try to talk down the euro today and we actually believe that EUR/USD will at end of the day be higher. Remember, that the macro economic picture is better than a month ago when Draghi sounded relatively upbeat. Today, he might even add that the repayment of the LTRO money is a sign of health, which should steepen the money market curve further adding further support to the euro”, he concludes.
Chief Analyst A.Lohman-Rasmussen at Danske Bank, believes that if President Draghi somehow talks down the recent uptick in EONIA rates, that could plot against any attempt by the single currency to gather further traction. The expert added that If this case materializes, the pullback would be temporary.
“In our view the market is far too optimistic that Draghi will try to talk down the euro today and we actually believe that EUR/USD will at end of the day be higher. Remember, that the macro economic picture is better than a month ago when Draghi sounded relatively upbeat. Today, he might even add that the repayment of the LTRO money is a sign of health, which should steepen the money market curve further adding further support to the euro”, he concludes.