EUR/USD rebound to 1.12 likely to attract bears – TDS

FXStreet (Barcelona) - The recent San Francisco Fed speech and ECB’s ‘front-loading’ of asset purchases caused the euro to fall against the dollar, and any rebound to 1.12 levels will likely attract sellers, according to FX Strategists at TD Securities.

Key Quotes

“The EUR is under pressure again this morning following comments from the ECB’s Coeuré indicating that the central bank would “front load” asset purchases through May and June, ahead of an anticipated lull in market activity/liquidity through the European summer. In addition, another governing council member (Noyer) observed that the ECB was ready to boost QE, if required.”

“The headwinds building up against the EUR rally were bolstered by a weekend report from the San Francisco Fed which suggested that the US economy was “substantially stronger” than official GDP data; after adjusting for a statistical quirk which might be responsible for the weakness in GDP growth in Q1 that has been a feature of the landscape in the past 5 years, the SF Fed said the US economy grew 1.8% in Q1, rather than the 0.2% rise reported in the official data.”

“Soft German ZEW data today rounded out the negative fundamental news for the EUR. With the ECB talking dovishly and the SF Fed possibly providing some cover for Fed lift-off later this year, little wonder EURUSUD is on the ropes; as we pointed out here, the technical situation for EURUSD would deteriorate on a break below support in the mid 1.12s.”

“We think EURUSD rebounds to the mid/upper 1.12s will attract sellers from here going forward.”