The euro dollar exchange rate (EUR/USD) could find upside as we move through the remainder of 2014 say analysts at Credit Agricole.
Delivering his latest forecast for the euro dollar rate Credit Agricole's Manuel Oliveri says:
"The EUR has been well supported, regardless of intensifying worries as related to Greece. We stay of the view that the currency should be bought on dips, for instance against the USD."
A look at the euro exchange rate today shows:
- The euro dollar conversion exchange rate is 0.19 pct higher @ 1.2786.
- The euro to pound conversion exchange rate is 0.07 pct lower @ 0.7924.
Note: All exchange rate quotes in this article are to be assumed as being taken from the wholesale currency markets. Your bank will subtract a spread at their own discretion. However, an independent FX provider will guarantee to undercut your bank's offer, thereby delivering up to 5% more FX. Learn more.
Why Credit Agricole are Backing the Euro vs the Dollar
The pro-EUR viewpoint is said to be mainly due to additional room of normalizing Fed-ECB monetary policy expectations and as speculative EUR short positioning remains close to elevated levels.
Furthermore, Oliveri says "it cannot be excluded that demand for EUR-denominated risk assets picks up anew after last few weeks’ correction lower in equities.
"As a result to the above outlined conditions we remain long EUR/USD as a trade recommendation, targeting a move to 1.31 over the coming few weeks.
"From a broader angle, we still like to sell the pair. However, more balanced speculative positioning may be required for doing so."
Euro Pound Exchange Rate Forecast: Outlook Picks Up for GBP
The euro has, for much of the week past, been firmly on the front-foot taking the EUR/GBP rate above the 0.80 threshold.
However, these gains have ultimately proved short-lived.
"The rejected test of the EUR/GBP topside on Wednesday and yesterday’s follow-through price action suggests that sentiment on sterling has improved. The 0.7755/0.8066 consolidation range looks well in place. We look to sell into strength for return action lower in this range," says Piet Lammens at KBC Markets.
Investors Increasingly Bet Against the Euro
looking at the IMM positioning data released at the close of the week we note investors have increasing their net EUR shorts to a total of –155.3k contracts (from –146.2k in the previous week).
This tells us a majority of speculators are betting on further declines in the euro in coming weeks and months.
"It remains to be seen whether specs have stuck to their EUR-bearish guns as the start of the new CFTC reporting week saw the EUR rally nearly 1.5%, the biggest one day rally in more than a year with the spot rate poised to close the calendar week with a second straight gain," cautions Shaun Osborne at TD Securities.
Other notable positioning changes in the week were observable in the CAD contract where net shorts doubled to –16.2k contracts (from –7.4k in the prior week) and, a little surprisingly considering the environment, in the CHF net shorts increased 5k to –17.5k this week.