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EUR/USD: 4 Reasons Why The USD Is Not Stronger?
EUR-USD is trading around 1.1640, sticking to the well’known ranges and not going anywhere fast. However, there may be room to the downside.
Bank of America Merrill Lynch FX Strategy Research discusses the USD outlook, outlining some key reasons on why the greenback is not trading at stronger levels.
1“- We see a number of reasons. Although the US data has been strong, headline inflation remains low and wage growth is persistently weak.
2- The market expects a December Fed hike, but is still far from the dot plot for 2018 and 2019.
3- The strong consensus remains that the tax reform will be difficult to approve and in any case will be light on its macro and market impact.
4- The official sector has been consistently selling the USD since spring, primarily against EUR and JPY, according to our flows,” BofAML argues.
“… What happens next depends on the chances of US tax reform, in our view,” BofAML adds.
BofAML maintains a short EUR/USD* position targeting 1.15.