EUR/USD neutral bias – KBC

FXStreet (Barcelona) - The KBC Bank Research Team maintains a neutral bias for EUR/USD going into the Fed meet, noting that the 1.0462-to 1.1098 range stands appropriate in the short-term.

Key Quotes

“At this stage there is still no obvious single driver from USD trading in general and for EUR/USD in particular. So, we hold a neutral bias ahead of the Fed.”

“The dollar is on defensive, but we don’t see strong reasons why EUR/USD should regain the 1.10/1.1052(98) resistance area in a sustained way.”

“The LT picture remains bullish for the USD, but the soft patch in the US is taking longer and some Fed governors see the economy having difficulties to get escape velocity. Therefore, they will wait longer before tightening policy. This is dollar negative.”

“Of course, on the side of the euro, QE will keep rates under downward pressure. At the same time, EMU eco data are improving. So, this brings the EUR/USD short term more in balance. Some dollar bulls may still have to reposition and therefore EUR/USD may revisit the 1.1098 area.”

“We see the 1.0462-to 1.1098 range as appropriate short term.”