EUR/USD could reach 1.14/1.15 near term – Westpac

Chief Currency Strategist at Westpac Richard Franulovich sees the likeliness the pair could clinch the 1.14-1.15 area in the short term.

Key Quotes

“Recent breakout higher through 1.11 appears to have been thwarted, the reversal having all the short term technical hallmarks of being a key near term high”.

“But short term Bund-Tsy spreads are still trending in EUR’s favour and without a material repricing in Fed hikes, EUR is unlikely to run away to the downside”.

“Soft Q2 US growth deals a nearly fatal blow to Sep tightening expectations (currently around 20%). EUR growth hardly sets the world alight either and ECB staff are sure to revise prospects lower in Sep. But the negative Q2 US growth surprise, along with downward revisions showing just 1% average growth in the last 3 qtrs, will prove the bigger theme”.

“EUR can trade to 1.14-1.15 near term. We are wrong through 1.1100, EUR/USD’s base just ahead of the release of the tepid US advance Q2 GP report”.