The European currency started the month in sideways trading at around 1.09, in anticipation of the French presidential election results. With Macron’s win, fears about a possible “Frexit” disappeared and the currency moved crossed the 1.10 mark.
The recent positive sentiment on the Euro is supported by the latest Euro Commitment of Traders (COT) report as well. We saw the net position for the Euro futures went into the positive territory for the first time in the past 3 years.
However, from a fundamental and macro point of view, we still expect the European currency to depreciate against the US dollar, or at least see some retracement in the next few weeks. The reason for this are subdued price trends and the continuation of the ECB’s asset purchase programme.
As long as ECB’s monetary policy remains accommodative versus a tightening policy of the Fed, this divergence in policies will potentially continue to provide some selling pressure on the Euro.
The recent positive sentiment on the Euro is supported by the latest Euro Commitment of Traders (COT) report as well. We saw the net position for the Euro futures went into the positive territory for the first time in the past 3 years.
However, from a fundamental and macro point of view, we still expect the European currency to depreciate against the US dollar, or at least see some retracement in the next few weeks. The reason for this are subdued price trends and the continuation of the ECB’s asset purchase programme.
As long as ECB’s monetary policy remains accommodative versus a tightening policy of the Fed, this divergence in policies will potentially continue to provide some selling pressure on the Euro.