Tim Riddell, Macro Strategist at Westpac, suggested EUR/USD could attempt a consolidative theme in the near term.
“Recent data have, on balance, beaten expectations and indicate an improving Eurozone. Also, base effects are lifting PPI and CPI headlines, but the lack of any credit demand growth is impeding attempts to lift the region from the risk of sliding back towards deflation”.
“The ECB does not meet until December 8, so external policy decisions and the US election may impact EUR more than regional issues. However, recent rises in Italian yields highlight the risks around Monte dei Paschi and the December 4 referendum. Some 27% of Italians remain undecided. While Renzi struggles to garner support, political concerns could outweigh improving regional data”.
“CHF may continue to rebound on risk aversion, but SNB’s affirmation of its scope for further NIRP should cap CHF”.
“The net impact is that EUR and CHF are likely to remain range bound unless there is a considerable US election shock”.
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